On July 7, Bloomberg reported that the Trump administration plans to restrict shipments of AI chips from the likes of Nvidia to Malaysia and Thailand, as part of an effort to crack down on suspected semiconductor smuggling into China.
“A draft rule from the Commerce Department seeks to prevent China — to which the US has effectively banned sales of Nvidia’s advanced AI processors — from obtaining those components through intermediaries in the two Southeast Asian nations,” the report says. The rule is not yet finalised, Bloomberg suggests.
Officials plan to pair the Malaysia and Thailand controls with a formal rescission of global curbs from the so-called AI diffusion rule. This move would formally replace the Biden-era AI diffusion rule, while maintaining existing chip restrictions on China and more than 40 other jurisdictions.
Although the rule is not yet final, it marks the first step in Trump’s broader overhaul of AI-related export controls. Chinese companies rent servers in Southeast Asian data centres (DCs) to indirectly access Nvidia’s advanced AI chips, a likely reason for the proposed curbs by Trump, notes Maybank in a July 7 update.
The proposal introduces uncertainty for Malaysia and Thailand’s growing roles as an emerging Asean/global DC hub. According to a recent Barclays report, the current data centre capacity in the Johor-Singapore Special Economic Zone is just 10 megawatts but data centre construction is underway to increase that to 1.5 gigawatts, raising fears of a Forest City-type situation for data centres. The restrictions could be a blessing in disguise, curbing oversupply of data centre-build, market-watchers indicate.
Maybank points out that Chinese technology giants are key drivers behind the rapid growth of DCs in Asean. “Bytedance, owner of TikTok, has committed substantial investments in Asean DC infrastructure (US$8.8 billion in Thailand and US$2.1 billion in Malaysia), aiming to support its massive user base locally and to help comply with data regulations,” the Maybank report says.
See also: Powering AI: Asia’s journey ahead
Alibaba Cloud, Tencent Cloud and Huawei have also expanded operations across the region to meet rising digital demand. Additionally, DayOne, which is GDS’s international division, has signed a 21-year agreement with Tenaga to secure up to 500 MW of renewable (solar) energy to power its Malaysian DCs. Meanwhile, GDS has filed for the IPO of a data centre REIT on the Shanghai Exchange.
“Whether these companies are indirectly using Asean to access and run AI models is debatable, we do note that a major portion of Asean’s DC boom is led by Chinese companies,” Maybank says.
If the Bloomberg report is true, Maybank says the companies in the supply chain such as Gamuda, Sunway Construction, IJM and Tenaga on Bursa; and WHA Corp PCL and Amata Corp PCL on the SET, which are developing industrial estates in Thailand, may experience near-term pressure due to demand uncertainty.
A beneficiary is likely to be Keppel DC REIT, which has more than 65% of its assets in Singapore.
