The Malaysian government has announced new restrictions on the export of US-made AI chips from the country in an effort to help reduce the number of advanced semiconductors being smuggled into China.

“High-performance AI chips of US origin” have been placed on the Strategic Items List (SIL) and are now subject to a Strategic Trade Permit under a ‘Catch-All Control provision’ introduced by the Malaysian Ministry of Investment, Trade and Industry (MITI), effective July 14.

Under the new legislation, companies or individuals wanting to ship US AI chips are now required to obtain a strategic trade permit, and must “notify the relevant authority at least 30 days before exporting, transhipping, or bringing in transit” said chips.

“Malaysia stands firm against any attempt to circumvent export controls or engage in illicit trade activities by any individual or company, who will face strict legal action if found violating the STA 2010 (Strategic Trade Act 2010) or related laws,” the MITI wrote in a press release.

Earlier this month, it was reported that the Trump administration is planning to restrict the shipments of AI chips to Malaysia and Thailand in an effort to clamp down on the practice of advanced semiconductors being smuggled out of countries and into China. The Malaysian Ministry said the initiative aims to close “regulatory gaps” that currently exist while it undertakes “further review” of the situation.

In June 2025, it was reported that the MITI was investigating an unnamed Chinese company’s potential usage of Nvidia chips that are banned under US export controls. A report from the Wall Street Journal that same month detailed the practice of Chinese engineers flying hard drives worth of data into Malaysia in order to use Nvidia’s chips.

Last week, the Trump Administration placed a 25 percent tariff rate on imports from Malaysia.