Malaysia implements export control measures on advanced AI chips

14 August 2025

On 14 July 2025, the Strategic Trade Controller under the Ministry of Investment, Trade and Industry (“MITI”) issued the Directive of the Strategic Trade Controller No.1/2025: Declaration of Unlisted Items under section 12 of the Strategic Trade Act 2010 (“STA”) in relation to advanced artificial intelligence (“AI”) chips (“Directive”). The purpose of the Directive is to restrict the export, transhipment, and transit of high-performance AI chips that may be used in activities relating to weapons of mass destruction (“WMD”).

This article provides an overview of the Directive.

Background

The STA imposes restrictions on the export, transhipment, transit and brokering of strategic items - such as military items, nuclear materials, navigation systems, or aerospace equipment - that could be used to design, develop, or produce WMD. These measures ensure that the STA aligns with Malaysia’s international commitments to preventing the proliferation of WMD.

Generally, the STA requires individuals or entities involved in the export, transhipment, transit or brokering of strategic items (and, in certain cases, unlisted items) to obtain the relevant permit or broker registration certificate under the STA.

Affected items

The Directive specifically targets advanced AI chips classified under the following unlisted item category codes, subject to certain exceptions, with product specifications outlined in Annex I of the Directive (collectively, “Advanced AI Chips”):

No	Category code	Product
1	Category 3 (3U090, 3A001.u)	Primarily integrated circuits (“ICs”) that meet or exceed the specified performance parameters
2	Category 4 (4U090, 4A003.u, 4A004.u, 4A005.u)	Primarily computers, electronic assemblies, and components containing ICs that meet or exceed the specified performance parameters
3	Category 5 (5U992, 5A002.u, 5A004.u)	Primarily information security systems, equipment, or components that meet or exceed the specified performance parameters

 

Notification requirement and permit application

Effective 14 July 2025, an advance notice of at least 30 days must be provided to the Strategic Trade Secretariat (“STS”) if a person intending to export, tranship, or bring Advanced AI Chips into transit, knows or believes that the Advanced AI Chips may be used for a restricted activity.

A “restricted activity” is defined in the STA as:

• any activity that supports the development, production, handling, usage, maintenance, storage, inventory or proliferation of any WMD and its delivery systems; or
• participation in transactions with persons engaged in such activities.

Upon receiving the notification, the STS will determine whether to approve the export, transhipment, or transit of the Advanced AI Chips. If approval is granted, a permit must be obtained under the STA before these activities can be undertaken.

A plain reading of the Directive and section 12(1) of the STA indicates that the 30-day notification requirement applies only where the Advanced AI Chips may be used in connection with WMD. In other words, if the person intending to export, tranship, or transit the Advanced AI Chips is neither aware nor has reasonable grounds to suspect such use, he is not required to provide the 30-day advance notice to the STS. It remains to be seen, however, whether MITI will require compliance with the notification requirement in all cases involving Advanced AI Chips even where there is no indication of any potential use in WMD.

Consequences of non-compliance

Non-compliance with section 12(1) of the STA is an offence. Upon conviction:

• if the act is committed intentionally or with knowledge, an individual will be liable to a fine of up to RM10 million or to imprisonment for up to 10 years or both. In the case of a body corporate, the fine is up to RM20 million; whereas
• if the act is committed unintentionally or without knowledge, an individual will be liable to a fine of up to RM5 million or to imprisonment for up to five years or both. For a body corporate, the fine is up to RM10 million.

Next steps

If there is reason to believe that a product may fall within the classification of an Advanced AI Chip under the Directive, it is advisable to take the following steps:

Step	Compliance Actions and Requirements
Step 1: Check product classification	Review Annex I of the Directive to verify whether product matches the product specifications listed.
Step 2: Submit AI Chip Assessment (“AICA”) form, if required	If the product meets Annex I specifications and the export, transhipment, or transit of such product may potentially involve a “restricted activity”, submit the completed AICA form to admin.sts@miti.gov.my at least 30 days before exporting, transhipping, or transiting.
Step 3: Determination by the STS	The STS will notify via email whether a permit is required. If so, apply for the necessary permit under the STA before proceeding.

 

What to watch out for

On 14 July 2025, MITI issued a media statement clarifying that the Directive is a necessary measure to prevent the circumvention of export controls on United States-origin AI chips in or through Malaysia. However, the Directive is drafted more broadly and does not depend on the country of origin of Advanced AI Chips. Companies are advised to review their products to ascertain whether any fall within the regulated list of Advanced AI Chips. Additionally, internal compliance programs should be reviewed to ensure that robust end-user due diligence procedures are in place to identify any potential nexus to activities involving WMD.

Further information

This article has been prepared with the assistance of Senior Associate Ng Hong Syuen.