Malaysia says probing Megaspeed subsidiary over possible AI chip diversion

KUALA LUMPUR: Malaysia's trade ministry said on Friday (Nov 13) that it was working with customs to determine whether any chips brought into the country by SpeedMatrix, a local unit of Singapore-based cloud computing firm Megaspeed, were re-exported to other countries.

It came the day after Nvidia boss Jensen Huang resigned over an affair, reportedly with Alice Huang - a suspected Chinese spy and former top executive at Megaspeed.

Megaspeed is under scrutiny for allegedly steering Nvidia AI chips to China despite US export rules designed to slow the development of artificial intelligence technology by Beijing.

In a statement on Friday, Malaysia's Ministry of Investment, Trade and Industry (MITI) said that Speedmatrix is a tenant at data centres in Malaysia and is allowed to bring AI chips into the country without a permit or license.

Currently, bringing AI chips into Malaysia does not require a permit or a licence. However, since July last year, anyone seeking to export, re-export, transship or transit "high-performance US AI chips" from or through Malaysia must obtain a permit.

Giving false information to customs authorities about such items is a "serious offence", said the ministry. 

"MITI is therefore working with the Royal Malaysian Customs Department to determine whether any of the chips brought into Malaysia have since been reexported to other countries, and whether such reexports were carried out in accordance with the law," it said. 

"Malaysia will carry out its own checks independently, in accordance with Malaysian law and based on the evidence available," it added.

The ministry said it "has never cleared" Megaspeed or its Malaysian affliate Speedmatrix.

Any verification visits carried out by the ministry at the data centre facilities were part of its regular monitoring of the sector, and should not be "taken to mean that a company has been cleared", it said. 

MITI also said it was working closely with authorities in Singapore and the United States and is considering further measures to strengthen controls where necessary. 

"While Malaysia does not enforce unilateral export controls imposed by other countries, all companies operating in Malaysia are expected to take such controls into account in their international business," it said.

The ministry called on companies not to misrepresent their dealings with government agencies, saying that stern action will be taken against those who break Malaysian law. 

"Malaysia welcomes investment in data centres and technology, but will not allow itself to be used to get around export controls. 

Megaspeed is also under investigation in Singapore.

Singapore's Ministry of Home Affairs said on Thursday that physical servers had been purchased by companies under investigation and exported through Singapore to Malaysia without entering the Singapore market.

The police were investigating whether the servers had subsequently been routed from Malaysia to another destination, contrary to declarations made by the companies in Singapore.

The Nvidia scandal has wiped almost half a trillion dollars off the company's market capitalisation, as it raises national security fears and leaves the AI industry in uncharted waters.

Singapore said Thursday it had barred Alice Huang from re-entering the country in February for giving investigators inaccurate information about her role at Megaspeed, though she was not investigated for espionage.