MITI’s AI Chip Export Rule To Have No Impact On Data Centres -- MIDF

KUALA LUMPUR, July 15 (Bernama) -- MIDF Amanah Investment Bank Bhd believes that data centres will not be affected by the Ministry of Investment, Trade and Industry’s (MITI) latest directive on artificial intelligence (AI) chips.

The ministry has issued a directive which requires all exports, transshipments and transits of high-performance AI chips of United States (US) origin in Malaysia to obtain a Strategic Trade Permit (STP).

In a research note today, the investment bank said the import of US-made advanced AI chips for use in domestic servers does not fall under the scope of the new rules unless the data centre operators intend to move the chips out of Malaysia.

“There is zero impact from this directive in our opinion, as far as data centres in Malaysia are concerned. This is not an additional red tape that could delay the process of setting up a data centre in Malaysia,” it said.

MIDF noted that since the beginning of the year, it has consistently reiterated that most new data centres are AI-ready, though some may eventually be used for non-AI purposes.

The investment bank said the directive primarily addresses the movement of AI chips out of Malaysia, which it views as a prudent move by MITI to prevent suspected smuggling of chips into China through intermediaries.

“This shows Malaysia’s willingness to take responsibility for the movement of US-origin AI chips out of the country by stepping up its enforcement,” it added.

MIDF said negotiations between Malaysia and the US will likely focus on regulatory enforcement, end-user monitoring, and the seriousness in addressing violations of the control measures.

“MITI’s latest directive covers all these. It is hoped that this will be able to placate the US when negotiating the restrictions of AI chip exports under Trump’s refashioned AI Diffusion Rule,” it said.

It added that speculation is growing around a possible shift from the current three-tiered country system to a licensing regime based on government-to-government agreements.

This could mean that firms headquartered in the US or its close allies may no longer be restricted by the current seven per cent AI computing power limit for countries outside Tier 1, which allows for more AI capacities to be planned in countries such as Malaysia.

“Regardless of the changes from Biden’s rescinded Framework of AI Diffusion to the new rule being rewritten by the Trump administration, MIDF believes the essence remains, which is to contain China’s AI advancement and ensure that US AI chips are not used to train Chinese AI models,” noted MIDF.

-- BERNAMA