The Trump administration is planning to tighten restrictions on AI chip exports to Malaysia and Thailand, aiming to block China from accessing advanced semiconductors through these countries.
According to a Bloomberg report, the Commerce Department’s draft rule would prevent Nvidia’s high-end AI chips—already banned from direct sales to China—from being rerouted via these Southeast Asian intermediaries. This move is part of a broader effort to crack down on smuggling while rolling back some of the Biden-era global restrictions that faced pushback from allies and tech firms.
The new rule would keep existing 2022 restrictions on China and over 40 other countries but scrap the broader “AI diffusion rule” that applied worldwide. It’s Trump’s first step in reworking his predecessor’s policies, though it doesn’t fully replace them or address security concerns around U.S. chips in overseas data centres. Commerce Secretary Howard Lutnick mentioned that allies could still buy AI chips if they’re managed by approved US data centre operators.
The U.S. has long struggled with balancing global tech adoption against the risk of chips ending up in China—either physically or through remote access. Southeast Asia is a hotspot for this issue, with Malaysia seeing a spike in chip shipments despite promises to tighten import checks under U.S. pressure.
The restrictions would include some flexibility to avoid disrupting supply chains, like allowing U.S. and allied companies to keep shipping chips without a license for a few months after the rule takes effect. Exemptions would also apply to critical manufacturing steps, since many chip firms rely on Southeast Asian facilities for processes like packaging.
Meanwhile, a Singapore court case highlights the smuggling concerns, with three men charged over allegedly misrepresenting the final destination of AI servers containing Nvidia chips.