[WASHINGTON] US President Donald Trump's administration plans to limit the shipment of AI chips to Nvidia, Malaysia and Thailand, part of a suspected semiconductor smuggling effort to China.
According to those familiar with the issue, the Commerce Department's draft is trying to prevent China, which effectively prohibits the sale of NVIDIA's advanced AI processors (which effectively prohibits the sale of Nvidia's advanced AI processors). The rules have not yet been fixed and could change, said those who requested anonymity to discuss private conversations.
Officials are planning to combine formal control of global curbs from so-called AI proliferation regulations with management in Malaysia and Thailand, people said. That framework from the end of President Joe Biden's term was challenged by US allies, including Nvidia, and high-tech companies. Washington will maintain semiconductor restrictions targeting China, imposed in 2022 and imposed several times since, and will also maintain more than 40 other countries covered by the 2023 measure.
To everyone, the rule would mark the first formal step in the promised overhaul of Trump's predecessor's AI spreading approach – the Commerce Department said in May that Biden would replace his own “bold and comprehensive strategy.” But the draft scale is far from a comprehensive alternative, people said. For example, we will not answer questions about security conditions for using US chips in overseas data centers. This is a discussion of the Middle East that has a particularly high interest. It is unclear whether Trump officials will ultimately regulate the shipment of AI chips to wider countries, beyond the addition of Malaysia and Thailand.
The Commerce Department did not respond to requests for comment. The agency has provided some details on the vision of the regulations beyond what Secretary Howard Lutnick told lawmakers last month. The United States will allow allies to purchase AI chips if they are run by an approved American data center operator.
Nvidia, the dominant manufacturer of AI chips, declined to comment, but a Thai and Malaysian government spokesperson did not respond. Nvidia CEO Jensen Huang has previously said there is “no evidence” of the AI chip repurpose. In response to previous Bloomberg questions about curbs focused on risk smuggling, Thailand said it was waiting for details, but Malaysia's Ministry of Investment, Trade and Industry said clear and consistent policies are essential for the technology sector.
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For years, Washington officials have debated which countries can import American AI chips. On the one hand, the world wants nvidia hardware, and US policymakers want to use American technology to build AI systems before China can provide a compelling alternative. Meanwhile, once these semiconductors leave the coast of the US alliance, US officials worry that chips will somehow be able to go to China, or that Chinese AI companies will benefit from remote access to data centers outside of Asian countries.
Southeast Asia is an important focus. Companies including Oracle are actively investing in data centres in Malaysia, and trade data shows that Chip shipments have skyrocketed over the past few months. Under pressure from Washington, Malaysian officials have pledged to scrutinise these imports in close scrutiny, but the Commerce Department's draft rules show that the United States still has concerns.
Sewing of semiconductors to Malaysia was also the focus of trials in neighbouring Singapore, with prosecutors accusing three men of fraudulently scamming their customers about the ultimate destination of AI servers originally shipped to Malaysia. (Nvidia is not subject to Singapore's investigation and has not been accused of fraud.)
All exports in Malaysia and Thailand curbs include several measures to ease pressure on businesses with key business operations, people familiar with the issue said. One provision allows companies headquartered in the US and dozens of friendly countries to continue shipping AI chips to both countries without seeking licenses for months after the regulations are made public.
The licensing requirements also include certain exemptions to prevent disruption in the supply chain, people said. Many semiconductor companies rely on facilities in Southeast Asia for important manufacturing steps such as packaging, and for chip wrapping processes for use in devices. Bloomberg
