Penang-based company denies moving AI chips to China

A Penang-based electronic manufacturing services (EMS) company has denied allegations that it moved AI computer chips – subject to sanctions from Washington – from the US to China, saying the claim was untrue.

Innospec Sdn Bhd said it only assembles the product “where all materials are consigned by the customers.”

“As far as we are concerned, we are assembling parts for our customers where none of the parts is sensitive tech (moved) from the US to China,” the firm told FMT.

The New York Times (NYT), in an article on Sept 6, accused Innospec of receiving computer chips and parts from Aivres, the American subsidiary of blacklisted Chinese tech firm Inspur.

These chips and parts were then forwarded to Maginfra, a China-based IT company. Washington has imposed export controls restricting the sale of advanced chips to China since 2022.

Innospec also said it could not ship parts consigned by and received from one customer to any other party, except shipping back to the consignor, as the company would be held responsible for any missing parts.

The firm, which is a subsidiary of Kobay Technology Bhd – a public-listed Malaysian manufacturing and technology group – also stressed that it adhered to the rules and regulations set by the government when conducting its operations.

“We do not receive any sensitive or restricted materials consigned by our customers that are assembled into the end product.”

Apart from Innospec, the NYT article, titled “How a Blacklisted Chinese Tech Giant Kept Buying America’s Best AI Chips,” also named several other Malaysian subsidiaries of regional firms with similar allegations.

Singapore-based Megaspeed International, meanwhile, was accused of “quietly moving” almost US$2 billion worth of Nvidia’s most advanced AI chips through its Malaysian subsidiary Speedmatrix Sdn Bhd.

The Malaysian operations of Singapore-based cloud computing provider, Aolani Cloud, were also accused of receiving computer chips and parts from Inspur’s subsidiary and then forwarding them to Chinese firms, with whom Aolani provides cloud computing services.

FMT has reached out to Megaspeed International and Aolani Cloud for comments on the allegations involving their subsidiaries, as well as to the investment, trade and industry ministry for comments.

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