Customs dept seizes AI chips worth nearly RM53mil at KLIA

KUALA LUMPUR: The customs department said on Friday it had thwarted an attempt to smuggle advanced artificial intelligence chips worth RM52.9 million (US$12.93 million) through Kuala Lumpur International Airport.

Malaysia imposed export controls last year on the movement of high-performance chips of US origin, following pressure from Washington to stem the flow to China of chips crucial for the development of AI.

On June 5, authorities carrying out an inspection at KLIA found 72 server units containing advanced AI chips that had been flown in to the airport’s free trade zone, KLIA customs director Zulkifli Muhammad told reporters.

An initial investigation found that the servers were to be re-exported to another country in Asia – a move that would require a permit under the Strategic Trade Act, Zulkifli said.

The items had been falsely declared as “computer components” to avoid detection, with Malaysia listed as a transit destination to circumvent restrictions before they arrived at the destination country, he said.

He declined to divulge further details, citing an ongoing probe.

Authorities have confiscated the servers while a Malaysian company that facilitated the shipment has been called in to assist in the investigations, he said.

Malaysia had investigated reports last year that a Chinese company in the country was using servers equipped with Nvidia chips for AI development, but found no evidence of illicit trade in advanced semiconductors.

The US also charged two Chinese nationals last August with illegally shipping tens of millions of dollars’ worth of AI chips from their El Monte-based company to China through shipping and freight forwarding companies in Malaysia and Singapore.

In a separate case, Zulkifli said the customs department also seized six boxes containing 4,760 vape liquid cartridges worth RM1.19 million, hidden in the casing of central processing units on June 10.

Checks showed that the vape liquid was laced with methamphetamine, with the shipment to be exported to a neighbouring country, he said, without specifying details.