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Washington's concern arises from evidence that these nations have become transit points for advanced semiconductors. While Singapore has long been under scrutiny as a hub for re‑exports to China, US officials now believe Malaysia and Thailand are emerging participants.
Malaysia, in particular, has seen an increase in imports of AI chips and related server components from Taiwan. Thailand, meanwhile, is suspected of hosting smuggling routes aimed at funneling Nvidia GPUs into China.
A licensed requirement for AI‑GPU exports to both countries would close these emerging loopholes, reinforcing existing US export bans targeting Chinese access to next‑gen AI hardware.
According to Bloomberg Insights, exporters of Nvidia AI chips, such as the latest H100, H800, or H20, would be required to secure explicit US government licenses before shipping to Malaysia or Thailand. The rule remains in draft form and is subject to change pending feedback.
Initial provisions might include transitional licenses for US or allied companies, allowing continued operations in the two countries for a brief transition period. Still, the primary intent is clear: prevent indirect Chinese access to advanced AI accelerators.
This move may have notable consequences for the booming AI server markets in Malaysia and Thailand. Taiwanese manufacturers, such as Quanta, Wiwynn, and other major server builders, have already set up large-scale motherboard and rack assembly operations in the region. For example, Wiwynn's Malaysian AI‑server rack production increased last year, while Quanta's Thailand footprint is significant.
US officials underscore that allied data centers remain eligible for GPU imports, provided they are operated by approved American cloud or infrastructure providers. This Secretary Lutnick's recent congressional testimony, outlining conditions under an updated "AI diffusion" policy. (Source: https://www.nationthailand.com/news/world/40052163 )
Trade data indicate that Malaysia's imports of AI chips increased significantly in recent months, data that helped trigger US interest. International Trade Administration reports revealed $3.4 billion worth of AI chip imports from Taiwan into Malaysia during March–April 2025, surpassing 2024's total for that period.
Furthermore, smart tactics used by Chinese firms, such as sending data on hard drives to Malaysian data centers equipped with US GPUs, then returning AI‑trained models, have reinforced Washington's resolve.
Though still in draft form, US officials stress that export curbs will not disrupt essential semiconductor supply chains, especially those needed for packaging or hardware assembly in Southeast Asia. The proposed restrictions also represent the first major revision of Biden-era diffusion rules by the Trump administration's Commerce Department.
The rule could be released in the coming weeks and enter a public comment phase before final implementation. While Nvidia has declined to comment, the Thai and Malaysian governments are reportedly awaiting more details, and Malaysian officials have indicated support for targeted controls to maintain transparency in the supply chain. (Source: https://www.tweaktown.com/news/106230/us-mulls-ai-chip-restrictions-for-malaysia-and-thailand-to-stop-flow-of-chips-china/index.html )
Bottom line: The US is moving to close potential AI‑GPU smuggling routes via Malaysia and Thailand by implementing stricter export license requirements. While the rule remains under review, these AI chip export restrictions are seen as a crucial step in combating China semiconductor smuggling and securing the integrity of advanced AI hardware exports, while balancing authorized industrial usage in allied data centers.
