Malaysia foils $12 million AI chip smuggling bid

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SEPANG, Malaysia — Malaysia foiled an attempt to smuggle advanced artificial intelligence chips through the country's main airport, customs officials said Wednesday, in a case worth more than $12 million.

The bust was the fifth case this year involving a syndicate smuggling advanced AI chips, the officials said, with the total estimated value exceeding $24 million.

The Southeast Asian nation, as a growing data center hub, is seeking to prevent itself from being used as a transit point for restricted chips headed elsewhere.

A team inspected Kuala Lumpur airport's free trade zone this month and seized 30 server units containing advanced AI chips worth 49.5 million ringgit ($12.1 million), airport customs director Aspalila Ag Tuah said.

Malaysia tightened export and transshipment controls on chips from the United States last year, requiring a strategic trade permit and advance notification if there is suspicion of misuse or diversion.

"The servers were declared as 'electronic components' to avoid detection by the authorities," Aspalila told a news conference.

"Initial investigations found that the servers were to be re-exported to another country in Asia," she added.

The syndicate involved used Malaysia as a transit point to ensure there were no restrictions during the export process of the servers to the next country of destination, she said.

Aspalila said the servers came from "an Asian country", declining to specify their exact origin, where the chips were made or where they were headed.

"The case is still under further investigation and the company that facilitated the shipment has been called in to assist investigations," she said.

The United States has been tightening restrictions on exports of advanced semiconductors through Malaysia and Thailand in an effort to curb their diversion to China.

Malaysia has also launched several probes, including one into how servers containing US-made Nvidia chips destined for Singapore ended up in Malaysia.

Authorities at the time said they found no evidence of illicit trade in advanced semiconductors. — Agence France-Presse