Kuala Lumpur: US President Donald Trump's plan to rescind the Biden-era artificial intelligence (AI) chip export rule presents opportunities for Malaysia to expand its AI chip industry and booming data centre sector. It could also deepen the country's specialisation in high-tech services and manufacturing, in line with national strategies to move the semiconductor industry up the value chain.
According to BERNAMA News Agency, UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research, Mohd Sedek Jantan, stated that this policy change could potentially boost foreign direct investments (FDIs) and export-driven growth for Malaysia. He highlighted that the relaxation of curbs could enhance Malaysia's access to high-performance AI chips such as Nvidia's H100 and H200 series, which are critical for training large language models and powering next-generation data infrastructure.
Mohd Sedek noted that this move could significantly benefit Malaysia's booming data centre ecosystem, which has attracted FDIs from global technology giants like Amazon Web Services, Microsoft, and Google since 2023. Malaysia's comparative advantage in data-hosting capabilities, such as offering relatively low-cost electricity, political stability, and geographic centrality in ASEAN, makes it an attractive destination for such investments.
The policy shift is seen as a facilitator for broader transformation within Malaysia's semiconductor ecosystem. Under the National Semiconductor Strategy (NSS), the government aims to move the sector up the value chain towards higher margin, front-end activities such as integrated circuit (IC) design and wafer fabrication. Companies like Intel and Infineon have already pledged significant capital for their Malaysian operations, particularly in Penang and Kulim in Kedah.
Trump's policy pivot could accelerate this transition by removing technological constraints, enabling Malaysian firms and institutions to engage more directly with advanced chipsets. Mohd Sedek emphasized that access to superior technologies can help Malaysia leapfrog into more innovative segments of the chip value chain, enhancing its total factor productivity and export complexity.
However, he also cautioned about potential compliance burdens arising from Washington's intensified focus on curbing technology leakages to China. Malaysia has previously been flagged in US policy circles as a potential transhipment hub for dual-use technologies, and the Trump administration is likely to amplify scrutiny on such routes. Even if the licensing regime formally lifts quantitative restrictions, it may simultaneously impose qualitative requirements such as end-user certifications, real-time monitoring of exports, and stricter enforcement under Malaysia's Strategic Trade Act (STA) 2010.
These requirements could inflate operating costs, particularly for small and medium enterprises (SMEs) in the semiconductor sector, thereby reducing their profitability and global competitiveness.
According to news reports, the Trump administration plans to rescind Biden-era AI chip curbs as part of a broader effort to revise semiconductor trade restrictions that have drawn strong opposition from major tech companies and foreign governments. The repeal, which is not yet final, seeks to refashion a policy launched under President Joe Biden that created three broad tiers of countries for regulating the export of chips from Nvidia and others. The Trump administration reportedly will not enforce the so-called AI diffusion rule when it takes effect on May 15.