Malaysian customs foil $13M AI chip smuggling bid

A team raided Kuala Lumpur airport's free trade zone on June 5 and seized 72 servers that were reportedly bound for export to another Asian country, airport customs director Zulkifli Muhammad said.

Malaysia tightened export and transshipment controls on chips from the United States last year, requiring a strategic trade permit and advance notification if there is suspicion of misuse or diversion.

The Southeast Asian nation, as a growing data-center hub, is seeking to prevent itself from being used as a transit point for restricted chips headed elsewhere.

"The servers were declared as 'computer components' to avoid detection from the authorities," Zulkifli told a news conference.

Malaysia's customs department officers show a pallet of server units containing advanced AI chips during a press conference on the department's seizure of 72 server units containing advanced AI chips at Sepang, Malaysia, June 26, 2026. Photo by Reuters

The syndicate involved used Malaysia as a transit point to ensure there were no restrictions during the export process, The Star daily newspaper said.

Zulkifli declined to say where the servers came from, where the chips were made, or where they were headed, adding that investigations were continuing.

However, he said a local logistics company involved in the shipment had been asked to assist in the investigation.

The U.S. has been tightening restrictions on exports of advanced semiconductors through Malaysia and Thailand in an effort to curb their diversion to China.

Malaysia has also launched several probes, including one into how servers containing U.S.-made Nvidia chips destined for Singapore ended up in Malaysia.