Malaysia seized $12 million in AI chips a syndicate labeled 'electronic components'

Malaysia's customs department said Wednesday it seized 30 servers packed with advanced AI chips, worth about $12.2 million, during an October 15 inspection at Kuala Lumpur International Airport's free-trade zone. The servers arrived from another Asian country falsely declared as ordinary electronic components, and were bound for re-export to a third Asian country without the trade permit the shipment required.

Officials believe a syndicate is using Malaysia as a transit hub to reroute US-origin chips toward China, slipping past the export controls Malaysia imposed last year under American pressure. Customs says this is the fifth case tied to the network, including 72 servers seized in June, with seizures linked to the ring now topping $24 million.

A Malaysian firm that facilitated the shipment has been called in to help investigators, and officials declined to name the chips' origin or final destination while the case is open. The controls only work if the transit hubs catch the reroutes — and this network has now tested Malaysia five times.