Malaysian data centres not impacted by Nvidia chip uproar
The US government has imposed restrictions on exports of advanced artificial intelligence chips to China. (Freepik pic)
PETALING JAYA : Malaysia's burgeoning data centre sector is unlikely to be derailed by reports alleging Chinese firms are using servers with Nvidia chips to train artificial intelligence (AI) models in the country, said MIDF Research.
The research house believes the US-made Nvidia chips involved were those of previous generations and not the latest GB200 AI chips, on which the US government has imposed restrictions on export to China.
MIDF noted there is no evident slowdown or delay in data centre projects in the pipeline despite the latest development.
'Contractors are still actively bidding for new data centre construction jobs,' it said in a note today.
This includes Gamuda Bhd which is selling 389 acres in Port Dickson to Google-linked Pearl Computing and securing a RM1.01 billion contract for data centre infrastructure works.
In addition, Sunway Construction Group Bhd has secured a RM1.16 billion job from a US tech giant while Microsoft reaffirmed its RM10.5 billion investment in cloud and AI infrastructure, including hyperscale data centres, in the Klang Valley.
MIDF also noted that not all data centres in the country are built specifically for AI, even though many are AI-ready. For example, YTL Power International Bhd only set aside 100MW for AI at its 500MW Kulai, Johor, facility.
The investment, trade and industry ministry (Miti) is currently investigating claims that a Chinese tech company is training artificial intelligence (AI) models in Malaysia using Nvidia-powered servers.
Sidestepping US restrictions?
This follows a Wall Street Journal report on allegations a Chinese company had in recent months been using Malaysia-based data centres to sidestep US restrictions on advanced chips.
The ministry said yesterday it is still in the process of verifying the matter with relevant agencies to determine if any local laws have been violated.
However, it noted such servers were not categorised as controlled items under the Strategic Trade Act 2010, and that local data centres were 'free to operate commercially, provided they adhered to Malaysian regulations'.
Still, Malaysia would stand firm against any individual or company that attempted to circumvent export controls or engage in illicit trade activities, it said.
It also affirmed Malaysia's compliance with global trade rules, including export controls relevant to the semiconductor and AI sectors.
'The ministry will always act firmly against any company operating in Malaysia, including those involved in the semiconductor and AI industries, that violates Malaysian and international trading regulations,' the statement said.
Malaysia not taking sides
Emphasising that Malaysia did not take sides over unilateral sanctions, Miti reminded companies operating here to comply with other countries' export controls in their international dealings to 'avoid secondary sanctions'.
The rising geopolitical tensions between the US and China, especially in the area of advanced technology and AI, is spilling over to this region.
It may have an adverse impact on Malaysia's strategic move to position itself as an early mover in AI. This is a mandate from Prime Minister Anwar Ibrahim, who has stated the government is committed to propelling the nation as 'a leading AI hub in Southeast Asia'.
AI requires significant computing power using advanced chips to run machine learning algorithms, perform complex data analyses, and make real-time, data-driven decisions. Data centres are the core infrastructure needed to meet these demands and fully unlock AI's potential.
Malaysia's data centre market is projected to grow substantially, with estimates indicating a rise from US$4.04 billion (RM17.2 billion) in 2024 to US$13.57 billion (RM57.8 billion) by 2030, according to the Malaysian Investment Development Authority.
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