According to the Financial Times as reported by Reuters, Malaysia is planning to impose stricter regulations on semiconductors due to pressure from the United States to prevent the transfer of vital chips to China for artificial intelligence development.

The U.S. government is requiring Malaysia to closely monitor the movement of high-end Nvidia chips entering the country, suspecting that many are being diverted to China. Trade Minister Zafrul Aziz stated that the U.S. has requested Malaysia to ensure surveillance of every shipment involving Nvidia chips to verify that servers are delivered to the intended data centers and not rerouted.

Nvidia has not yet responded to requests for comments from Reuters. The U.S. is examining whether DeepSeek, a company that gained attention for its AI model earlier this year, is using prohibited U.S. chips.

Malaysia is investigating potential violations of local laws in the shipment of servers relating to a fraud case in Singapore, which may have contained advanced chips under U.S. export controls.

Singapore authorities revealed that the case involving fraudulent supply of U.S. servers to Malaysia is valued at $390 million. The media in Singapore have suggested a connection between this case and the suspected transfer of Nvidia's AI chips to the Chinese company DeepSeek.

The information was reported by Rishabh Jaiswal in Bengaluru and edited by Mrigank Dhaniwala.