Malaysian authorities have promised the US to tighten control over Nvidia accelerator supply chains

The story of searching for traces of contraband Nvidia accelerators that were not supposed to reach China due to US sanctions has taken a new turn. Malaysian authorities have promised their American colleagues to tighten control over supply channels for such products so that they do not reach China under US export restrictions.

Image source: NVIDIA

As Trade Minister Zafrul Aziz admitted in an interview with the Financial Times, “The US has asked us to monitor every shipment containing Nvidia chips coming into Malaysia.” The official added that the country’s government has formed a task force, headed by Digital Minister Gobind Singh Deo, to tighten controls on shipments in the data center sector, which is booming in Malaysia. “They want us to ensure that the servers are shipped to the specific data centers they are destined for, and not suddenly transferred to another ship,” the Malaysian trade minister explained.

Recall that in Singapore, nine people were detained on suspicion of smuggling equipment to China in defiance of US sanctions, three of them were charged with the corresponding charges, and the amount of damage is estimated at $390 million. Singapore police raided 22 companies that could be involved in such deliveries. Then it became known that the “smuggled” servers could have been sent to Malaysia using invoices paid in Singapore, but the authorities of the latter found out that the Nvidia accelerators in the Dell and Supermicro servers were not delivered to data centers in the country.

Nvidia’s Singapore office handles almost a quarter of the company’s revenue through its accounts, but in fact, the bulk of the paid equipment does not even temporarily enter the territory of this state, but is supplied to other countries. Malaysia is currently actively building data centers. The country, with the participation of Singapore, created a special economic zone, and over the past year and a half has attracted more than $25 billion from large foreign investors to build data centers on its territory.

As Malaysia’s Trade Minister emphasized, it is quite difficult to track equipment in global supply chains. The United States is increasing pressure on its own companies, demanding that they monitor the end users of such products. Most participants in the supply chain are required to provide all possible assistance in tracking logistics routes. According to the official, such control is very difficult to implement in practice.