Malaysia Customs Confiscates $13 Million in Advanced AI Chips

On Friday, June 26, Malaysia’s customs department announced that it had successfully prevented an attempt to smuggle advanced artificial intelligence chips valued at 52.9 million Malaysian ringgit ($12.93 million) through the main airport this month.

To control the flow of high-performance chips of US origin to China, Malaysia implemented export restrictions last year, responding to pressure from the United States.

During an inspection at Kuala Lumpur International Airport on June 5, customs authorities discovered 72 server units containing advanced AI chips that were flown into the free trade zone, as reported by the airport’s customs director, Zulkifli Muhammad.
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Preliminary investigations indicated that the servers were intended for re-export to another Asian country, a transaction that would necessitate a permit under Malaysia’s Strategic Trade Act, Zulkifli explained.

The shipments were falsely labeled as “computer components” to evade detection, with Malaysia designated as a transit point to bypass restrictions before reaching their final destination, he shared, choosing not to provide additional details due to an ongoing investigation.

Customs officials have confiscated the servers, and a Malaysian company that facilitated the shipment has been summoned to assist with the inquiry, he added.

Last year, Malaysia looked into reports that a Chinese firm in the country was utilizing servers equipped with Nvidia chips for AI development but found no evidence of illegal trade in advanced semiconductors.

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In a related matter, the United States charged two Chinese nationals last August for illegally exporting AI chips worth tens of millions of dollars from their El Monte-based business to China, facilitated by shipping and freight forwarding companies in Malaysia and Singapore.

In a separate incident, Zulkifli reported that customs also seized six boxes containing 4,760 cartridges of vape liquid valued at 1.19 million ringgit ($290,953.55), concealed within central processing unit casings on June 10.

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Inspections revealed that the vape liquid was mixed with methamphetamine, intended for export to a neighboring country, although he did not disclose further details.