Malaysia seizes servers with advanced AI chips suspected of violating export controls

KUALA LUMPUR, Malaysia — Malaysia’s customs department said Wednesday it had seized 30 servers equipped with advanced artificial intelligence chips in a suspected export-control violation. Officials believe a syndicate is using Malaysia as a transit hub to re-export the chips to another Asian country.

Malaysia introduced permit requirements for the export, transit and transshipment of high-performance AI chips of U.S. origin last year, under pressure from the U.S. to ensure sensitive technology isn't rerouted to China through third countries. Washington has sought to restrict China’s access to advanced semiconductors to curb Beijing’s AI and military capabilities.

The shipment, worth about 50 million ringgit ($12.2 million), was intercepted at the free trade zone area at the country's main airport during an inspection on Oct. 15, the airport's customs director Aspalila Ag Tuah told reporters.

The servers, which came from an Asian country, were falsely declared as electric components to avoid detection before being reexported to another Asian country without the required permit, she said.

“The syndicate is using Malaysia as a transit destination to ensure there would be no restrictions imposed while the servers are exported to the next destination,” the customs department said in a statement.

Aspalila said the shipment was believed to be linked to a syndicate behind five attempted smuggling operations, including one in June when customs authorities seized 72 servers containing advanced AI chips at the airport’s free trade zone.

She said a Malaysian firm that facilitated the shipment has been called in to assist investigations. She declined to give further details on the origin of the chips or their final destination, saying the case was under investigation.