USA: The Biden administration has unveiled a bold new directive aimed at preserving the United States’ dominance in artificial intelligence (AI) technology by tightening restrictions on AI chip exports.
According to an article published by Lowyat, the move introduces a tiered system for classifying nations, each with distinct access to US semiconductor technology, to curb the spread of sensitive AI capabilities to geopolitical rivals.
Three-tiered system for AI chip access
Under the new framework, countries are classified into three categories based on their access to advanced AI chips.
Tier 1 nations, including close US allies like Japan and the UK, enjoy unrestricted access to AI chips, positioning them as key partners in advancing the technology.
Tier 2 nations, such as Malaysia and Singapore, will face restrictions, limiting their access to certain high-performance chips.
Meanwhile, Tier 3 nations, including China and Russia, are completely barred from receiving AI chips, a move aimed at preventing these countries from exploiting the technology for military or economic gains.
One of the key concerns driving these new restrictions is the possibility of Tier 3 nations bypassing export controls by using cloud computing services hosted in third-party regions.
To counter this, the administration has imposed a cap on the amount of computing power that US companies can deploy abroad, limiting operations to just 50% of their total computing capacity and imposing stringent controls on allocations to Tier 2 nations.
Malaysia’s strategic position – opportunities and challenges
For Malaysia, placed in Tier 2, the policy presents both opportunities and challenges.
While the country’s ambition to become a regional data hub remains intact, it faces potential limitations in its semiconductor and AI sectors due to restricted access to crucial AI chips.
Despite these hurdles, Malaysia stands to benefit from the continued growth of AI data centers in the region, with global tech giants like Microsoft, Google, and Amazon being exempt from the computing power restrictions.
These companies are allowed to build AI data centers in Malaysia without limitations, reinforcing the nation’s standing as a hub for AI infrastructure in Southeast Asia.
However, the policy has sparked a mixed reaction from industry stakeholders.
Wong Siew Hai, President of the Malaysian Semiconductor Industry Association (MSIA), has expressed concerns over the confusion created by the directive, particularly regarding compliance requirements for GPU purchases.
In response, Malaysia’s Ministry of Science, Technology, and Innovation (Mosti) has announced plans to work closely with the Ministry of Investment, Trade, and Industry (Miti) to prepare for the potential economic impact of the restrictions.
On the other hand, some Malaysian companies, such as YTL Power, remain optimistic.
The company, which is working with NVIDIA to deploy state-of-the-art AI data centers in Asia, believes its operations will remain unaffected due to exemptions granted to major US tech firms.
Innovation and US competitiveness at risk
While Malaysia navigates its position within the new export framework, global industry voices have raised alarms about the broader impact of the export restrictions.
The Semiconductor Industry Association (SIA) has cautioned that the policy could stifle innovation and erode US competitiveness in the global tech race.
SIA President John Neuffer warned that by limiting access to advanced AI chips, the US risks ceding critical markets to global competitors, undermining its leadership in the fast-evolving AI sector.
NVIDIA, a leading provider of AI chips, echoed these concerns.
Ned Finkle, NVIDIA’s Vice President of Global Public Policy, argued that the new export restrictions—especially the “AI Diffusion” rule—could derail economic growth and hinder the development of cutting-edge technologies, ultimately weakening the US position as the global leader in AI and semiconductor innovation.
As the US moves forward with these restrictions, the industry will continue to grapple with the delicate balance between national security concerns and the need to foster innovation and maintain a competitive edge in the global technology arena.
