Malaysia Tightens Rules on Movement of U.S.-Made AI Chips

Malaysia has tightened rules around the movement of artificial-intelligence chips from the U.S., a hot-button issue for the Trump administration’s trade policy.

KUALA LUMPUR, Malaysia—Malaysia has tightened rules around the movement of artificial-intelligence chips from the U.S., a hot-button issue for the Trump administration’s trade policy.

Malaysia’s move is aimed at closing regulatory gaps and preventing potential illegal trade.

Permits will now be required for all high-performance AI chips entering or leaving Malaysia that originate from the U.S., Malaysia’s Ministry of Investment, Trade and Industry said Monday.

The measure is aimed at closing regulatory gaps and preventing potential illegal trade, it said in a statement.

Last month, the ministry said it was examining media reports that a Chinese company operating in Malaysia used servers equipped with Nvidia and other AI chips to train large-language models.

The U.S. has been tightening restrictions around the sale of advanced AI chips and other technology to China since 2022, citing national-security concerns.

The Wall Street Journal reported in June that Chinese companies had found ways to bypass U.S. curbs on semiconductors, some involving passing through countries in Southeast Asia.

A key issue mentioned by the Trump administration as it looks to establish its trade policies has been preventing the rerouting of goods via third countries to avoid higher tariffs, also known as transshipment.

Letters sent to various countries, including Malaysia, earlier this month outlining tariffs warned about transshipped goods.

Malaysia faces a 25% tariff on its U.S.-bound exports, and products from other countries that pass through Malaysia to skirt higher duties elsewhere will face an even higher rate.

A deal the U.S. reached with Vietnam contained a similar proviso on transshipments.

In Monday’s statement, Malaysia’s government said it “will not tolerate the misuse of its jurisdiction for illicit trading activities.”

Malaysia’s emergence as a data-center hub has drawn billions in investment from major global tech players such as Microsoft, Alphabet’s Google and TikTok parent ByteDance. That has also put it under increased geopolitical scrutiny.

TA Securities senior analyst Chan Mun Chun said the trade ministry is making efforts to avoid being targeted by export controls of semiconductors and related products.

Write to Ying Xian Wong at yingxian.wong@wsj.com