Malaysia has announced that exporters must now obtain official permits before sending high-performance US artificial intelligence chips abroad, showing that the government wants to prevent the illegal redirection of these sensitive items to countries like China.

Starting today, individuals and companies involved in exporting these chips must inform Malaysian authorities at least 30 days in advance, the Ministry of Investment, Trade and Industry said on Monday. They are also required to notify the ministry if they know or "have reasonable grounds to suspect" that the chips might be misused or used for prohibited purposes.

Malaysia "will not allow the abuse of Malaysia's jurisdiction for illegal trade activities," the ministry stated. The United States has been increasing pressure on Malaysia to stop the suspected transfer of advanced AI chips to China through middlemen, especially since Washington banned direct sales of these chips to China in 2022.

In March, Malaysian authorities had already announced plans to tighten oversight of the fast-growing data centre industry, which depends on chips from companies like Nvidia Corp. The ministry said the new permit rules are meant to "close regulatory gaps" while the government continues to review whether AI chips should be added to a national list of items regulated under the Strategic Trade Act.

The ministry did not respond immediately to questions about whether this step was influenced by pressure from the United States.

Sales of semiconductors to Malaysia have also come up in a court case in nearby Singapore. Prosecutors there have charged three men with misleading customers about the final destination of AI servers. These servers, which were first sent from Singapore to Malaysia, might have contained advanced Nvidia chips. In March, Malaysian authorities said they had not found any evidence of such shipments but confirmed they would continue monitoring for possible fraud. Nvidia has not been accused of any wrongdoing in the Singapore case.

Malaysia is a significant part of the AI supply chain and hosts many facilities involved in developing and deploying AI systems. US companies such as Oracle Corp. have been expanding their data centre operations in the country. Malaysia also saw a rise in imports of key AI components earlier this year, especially in April, just before the US was expected to begin requiring licenses for exporting AI chips to Malaysia and several other countries.

In May, the Trump administration decided not to implement that licensing requirement. However, US officials have since drafted a new rule that would make such licenses necessary for exports of AI chips to Malaysia and Thailand. According to Bloomberg, the rule is still under review and could change before being finalised.

Nvidia Chief Executive Jensen Huang has stated that there is "no evidence" of AI chip diversion in total, without specifying any country. In response to earlier Bloomberg questions about the US restrictions, Malaysia's trade ministry said it is open to discussions with the US and other countries to "clarify any misunderstandings."

At the same time, the ministry warned that unilateral restrictions may harm legitimate trade and slow down innovation. The ministry added that "all issues concerning Malaysia-US bilateral trade are interconnected, each playing its own specific function in the ongoing trade negotiations."