Malaysia’s AI Plans May Face Challenges Due to US Export Restrictions

PETALING JAYA: There is growing uncertainty regarding the impact of potential restrictions on artificial intelligence (AI) chip exports from the United States. Analysts have varying opinions on how this could affect Malaysia, according to the National AI Office (NAIO).

A NAIO spokesperson noted that many elements surrounding the US export standards are still unclear.

He mentioned that the details of the export restrictions remain vague and need to be carefully evaluated by the Malaysian government.

“Despite this situation, Malaysia is committed to exploring all avenues related to AI, adhering to the national AI roadmap,” he stated when interviewed.

“We recognize that the United States is a significant strategic partner for Malaysia, and we maintain a strong relationship with them,” he added.

The NAIO is dedicated to collaborating with its US counterparts and local entities to navigate these changes.

Recent reports indicate that President Joe Biden is considering restrictions on the export of AI chips as part of an effort to prevent advanced technologies from being used by rival nations.

This initiative is expected to involve three tiers of export restrictions.

The first tier allows full access to US-manufactured chips for 18 allied and friendly countries while introducing new limitations, including caps on computing power, for other nations.

Malaysia, along with many other nations, falls under Tier Two, where the cap on computing power is anticipated to be approximately 50,000 graphics processing units from 2025 to 2027.

Organizations in these Tier Two countries can bypass these limitations by obtaining a validated end-user designation, contingent on compliance with US security standards, which encompass physical, cyber, personnel concerns, and human rights.

Countries placed in the third tier will be completely barred from receiving US chip exports, with China and nations under US arms embargoes being notable examples.

Experts warn that if these restrictions are put in place, they could represent a considerable hurdle for Malaysia's technology sector.

Dr. Arumugam G. Sithamparam, a senior lecturer at the Asia-Pacific University of Technology and Innovation, highlighted that these checks could impede data centers' ability to manage advanced AI workloads and affect their competitive standing.

Furthermore, he suggested that these measures would obstruct Malaysia’s ambition to emerge as a leader in the global semiconductor and data center industries.

“Achieving adherence to US security and human rights benchmarks could enhance Malaysia's position within the semiconductor supply chain and facilitate stronger ties with leading US tech companies,” Dr. Arumugam remarked.

“In this rapidly evolving global context, Malaysia must approach these restrictions carefully to balance its economic goals with compliance to US regulations,” he concluded, noting the recent uptick in data center investments within the country.

AI, Exports, Technology