KUALA LUMPUR (Jan 18): In a last-minute move by the Biden-Harris administration, a new Interim Final Rule on Artificial Intelligence Diffusion was announced on Monday (Jan 13), imposing stricter export controls on US-developed AI chips.

This rule introduces a three-tier licensing framework for semiconductor exports, exempting allies like South Korea and Taiwan but heavily restricting countries such as China and Russia.

Malaysia falls in the middle tier, facing export caps and licensing requirements, potentially disrupting its semiconductor sector, which plays a pivotal role in global chip packaging and testing.

The US-based Semiconductor Industry Association (SIA) and Nvidia Corp have criticised the rule as rushed and damaging.

SIA chief executive officer John Neuffer warned of “unintended and lasting damage” to US competitiveness, while Nvidia vice-president Ned Finkle condemned the 200-page regulation as stifling innovation.

Nvidia CEO Jensen Huang, one of the most powerful men in Silicon Valley, has pledged to engage the incoming Trump administration, which is expected to refine the rule during its 120-day comment period.

For Malaysia, the stakes are high. As the sixth-largest semiconductor exporter globally, the nation contributes 13% of the world’s chip testing and packaging services and processes 23% of all American chips. These strong ties with US firms have been instrumental in Malaysia’s semiconductor growth over the decades.

In the latest issue of The Edge Malaysia, industry captains such as ViTrox Corp Bhd (KL:VITROX) senior executive vice-president Steven Siaw Kok Tong, JF Technology Bhd (KL:JFTECH) managing director Datuk Foong Wei Kuong, QES Group Bhd (KL:QES) co-founder Chew Ne Weng, as well as Selangor Information Technology and Digital Economy Corp (Sidec) CEO Yong Kai Ping, shared their insights on the issue, highlighting the sector’s vulnerabilities and opportunities.

Aside from that, Professor Dr Chris Miller, the author of Chip War: The Fight for the World’s Most Critical Technology, added depth via an exclusive interview with The Edge, shedding light on the challenges facing Malaysia as the country navigates the US-China tech cold war.

His perspectives, shared ahead of his appearance at Forum Ekonomi Malaysia 2025, highlights the importance of balancing neutrality with strategic growth in this volatile landscape.

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