Advanced AI chips worth $13 Million seized by Malaysia customs

Malaysia’s customs department said on Friday, June 26 it had thwarted an attempt to smuggle advanced artificial intelligence chips worth 52.9 million Malaysian ringgit ($12.93 million) through the country’s main airport this month.

Malaysia imposed export controls last year on the movement of high-performance chips of US origin, following pressure from the United States to stem the flow to China of chips crucial for the development of AI.

On June 5, authorities carrying out an inspection at Kuala Lumpur International Airport found 72 server units containing advanced AI chips that had been flown into the airport’s free trade zone, the airport’s customs director Zulkifli Muhammad told reporters.
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Initial investigations found that the servers were to be re-exported to another country in Asia – a move that would require a permit under Malaysia’s Strategic Trade Act, Zulkifli said.

The items had been falsely declared as “computer components” to avoid detection, with Malaysia listed as a transit destination to circumvent restrictions before they arrived at the destination country, he said, declining to divulge further details, citing an ongoing probe.

Authorities have confiscated the servers while a Malaysian company that facilitated the shipment has been called in to assist investigations, he added.

Malaysia had investigated reports last year that a Chinese company in the country was using servers equipped with Nvidia chips for AI development but found no evidence of illicit trade in advanced semiconductors.

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The United States also charged two Chinese nationals last August with illegally shipping tens of millions of dollars’ worth of AI chips from their El Monte-based company to China via shipping and freight forwarding companies in Malaysia and Singapore.

In a separate case, Zulkifli said customs had also seized six boxes containing 4,760 cartridges of vape liquid worth 1.19 million ringgit ($290,953.55), hidden in the casing of central processing units on June 10.

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Checks showed that the vape liquid was laced with methamphetamine, with the shipment to be exported to a neighbouring country, he said, without specifying details.