KUALA LUMPUR, July 14, 2025 (BSS/AFP) - Malaysia clamped down Monday on the export, transshipment and transit of all US-made artificial intelligence chips, seeking to stop illegal trade including to countries such as China.

"Effective immediately, all exports, transships and transits of high-performance AI chips of US origin are subject to a strategic trade permit," the investment, trade and industry ministry said in a statement.

"This initiative serves to close regulatory gaps while Malaysia undertakes further review on the inclusion of high-performance AI chips of US origin" into its so-called Strategic Items List, the government said.

Washington has previously voiced concern about the transshipment of US-made AI chips, especially for the potential of sensitive components being diverted to China.

Kuala Lumpur last month said it was verifying reports that a Chinese company may have been bypassing US export curbs on high end chips by using servers housing Nvidia chips based in the Southeast Asian country.

The Wall Street Journal reported that Chinese engineers had flown to Malaysia in March carrying hard drives containing data to build artificial intelligence models in Malaysian data centres using advanced Nvidia chips.

The engineers then planned to bring the AI models back to China, the report said.

The United States has cracked down on exports of advanced semiconductors to China, including those made by US tech giant Nvidia, as it seeks to retain a competitive edge over the technology.