Malaysia seizes 30 AI-chip servers at airport free trade zone

KUALA LUMPUR: Malaysia's customs department seized 30 servers loaded with advanced artificial intelligence chips at the free trade zone area of the country's main airport during an inspection on Oct. 15, the airport's customs director Aspalila Ag Tuah told reporters. The shipment was valued at about 50 million ringgit ($12.2 million).

The servers arrived from an Asian country and were declared as electric components, Aspalila said. The shipment was then bound for another Asian country without the permit required under rules Malaysia introduced last year for the export, transit and transshipment of high-performance AI chips of U.S. origin. Those rules followed pressure from Washington to keep sensitive technology from being rerouted to China through third countries. The United States has worked to limit China's access to advanced semiconductors to curb Beijing's AI and military capabilities.

In a statement, the customs department said: "The syndicate is using Malaysia as a transit destination to ensure there would be no restrictions imposed while the servers are exported to the next destination." Aspalila said investigators believe the shipment is connected to a syndicate behind five attempted smuggling operations. One of those, in June, yielded a seizure of 72 servers containing advanced AI chips at the same free trade zone.

Aspalila said a Malaysian firm that handled the shipment has been called in to assist the investigation. She declined to say where the chips originated or where they were headed, saying the case remains under investigation.

Malaysia's permit requirements for high-performance AI chips took effect last year. Aspalila declined to provide further detail on the chips' origin or final destination.