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Malaysia’s position as a Tier 2 nation under the United States’ newly introduced AI chip export restrictions is unlikely to immediately affect the country’s existing data centers, according to Deputy Investment, Trade, and Industry Minister Liew Chin Tong. However, he emphasized that the long-term implications for future arrangements will depend on further discussions with the incoming US administration and internal stakeholders.
Minimal Impact on Existing Data Centers
Speaking at the CEO Series 2025 Rehda’s Annual Property Developers Conference, Liew clarified that the restrictions, which impose varying levels of access to advanced AI chips based on a country’s tier, will not disrupt the operations of Malaysia’s current data centers. However, he noted uncertainties regarding how these measures may shape future investments and partnerships in the AI and semiconductor sectors.
- Tier System Overview:
- Tier 1 nations (e.g., Japan, UK): Unrestricted access to AI chips.
- Tier 2 nations (e.g., Malaysia, Singapore): Restricted access with export caps.
- Tier 3 nations (e.g., China, Russia): Completely barred from AI chip technology.
The directive also limits US companies from deploying more than 50% of their computing power abroad, with strict caps on allocations to Tier 2 nations. This is intended to prevent Tier 3 nations from bypassing restrictions via cloud computing services in other regions.
Next Steps for Malaysia
Liew emphasized the importance of engaging with the incoming US administration and internal stakeholders to better understand and adapt to the regulation’s potential long-term impact. He indicated optimism about finding ways to address any challenges, given Malaysia’s inclusion in Tier 2 alongside other technologically advanced nations like Singapore.
- Government’s Approach:
- Maintain open dialogue with the US to gain clarity on the scope of the restrictions.
- Collaborate with domestic industries to align strategies with the evolving regulatory landscape.
Industrial and Talent Development
In a broader discussion about Malaysia’s industrial competitiveness, Liew criticized the over-reliance on industrial parks as real estate ventures, which he said limits their contribution to the nation’s economy. He called for reforms to better leverage industrial parks as hubs for innovation and high-value manufacturing.
- Talent Retention:
- With rising costs for hiring foreign workers, Liew advocated for providing affordable housing for local engineers within industrial parks to attract and retain Malaysian talent.
- He proposed using affordable housing to narrow the pay gap with Singapore, making Malaysia a more competitive option for talent.
Rehda Institute CEO Series 2025
The conference served as a platform to discuss Malaysia’s 2025 economic outlook, Budget 2025 impacts on the real estate and broader economy, and digital disruption in construction and real estate sectors. Liew emphasized the critical role of the real estate industry in advancing Malaysia’s economic goals, including enhancing industrial competitiveness and fostering local talent.
Malaysia’s inclusion in Tier 2 reflects its status as a significant player in the global semiconductor supply chain but also highlights its need to adapt to geopolitical shifts in AI technology. While existing infrastructure remains unaffected, maintaining relevance in the AI and semiconductor sectors will require strategic planning and collaboration at both domestic and international levels.
Liew’s comments underline the government’s commitment to balancing global AI regulations with national economic goals, ensuring Malaysia continues to attract investments and advance its role in the regional and global tech landscape.