Malaysia plans to tighten regulations on semiconductors as it comes under intense US scrutiny. Allegedly, it has been detected that semiconductor chips that are integral to AI development have passed through Malaysia and ended up in China. The allegation has been made that the chips in question are made by the US-based company Nvidia, which is banned from selling technology to China.
In response, the US is demanding that Malaysia tracks the movement of Nvidia chips that enter the country. Concurrently, it is investigating whether or not DeepSeek, the popular Chinese AI tool, is developing software with US chips, which it has been prohibited from doing. China, relatedly, has launched a probe into Nvidia.
Since President Trump’s return to the White House, the US has doggedly pursued China in the unfolding AI race. While some commentators are calling for better relations between the two superpowers, especially where AI is concerned, it’s unlikely that the government would countenance closer collaboration. The two countries have enjoyed a particularly hostile relationship in the last decade or so.
US Pressures Malaysia to Investigate Flow of AI Chips
The US has told Malaysia to tighten regulations surrounding the export of US-made semiconductors. The Nvidia chips, which form a key building block of AI technology, have reportedly been making their way to China via Malaysia.
There are concerns that when the chips arrive in Malaysia, some of them are rerouted to pass into China. This could potentially explain the meteoric rise of Chinese AI platform DeepSeek.
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Malaysian Trade Minister Zafrul Aziz told The Financial Times: “[They’re] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips. They want us to make sure that servers end up in the data centers that they’re supposed to and not suddenly move to another ship.”
Paranoia Abounds Over China AI Successes
As it puts pressure on Malaysia, the US is also conducting an investigation into whether or not China’s latest AI developments have been built on US semiconductor technology. Nvidia, which powers much of the AI development around the world, is not allowed to sell its advanced chips to China.
This has not deterred the superpower. In recent months, China has rolled out two genuinely game-changing AI propositions – DeepSeek and, more recently, Manus AI. The groundbreaking impact of these models has raised suspicions in the US. It is now thought that China has continued to build its latest innovations with US-made semiconductors.
In December 2024, meanwhile, China’s antimonopoly regulator launched a probe into Nvidia. It is currently investigating whether or not the US chipmaker has violated the country’s antitrust laws.
US-China Hostilities Unlikely to Abate
The race for AI supremacy is a hotly-contested battle between the US and China, with no clear winner at this point in time. Recent innovations from the eastern superpower, including DeepSeek and Manus, have attracted global attention. At the same time, the US continues to pour vast sums into meeting its own ambitions, such as the $500 billion investment into Project Stargate.
Meanwhile, Stephen Orlins, who heads up the National Committee on United States-China Relations (NCUSCR), has called on the two superpowers to set aside their differences and cooperate on AI. With so much bad blood between the two countries in the last decade or so, it would require a herculean diplomatic effort to bring about the kind of mutually-beneficial relationship that Orlins is proposing.
And with President Trump back in the White House, the US is pursuing a hostile trade strategy where China is concerned. It’s very unlikely that the current administration would entertain such a relationship.
