Malaysia retracts announcement of Huawei-powered AI infrastructure after U.S. pressure, revealing its vulnerable position in the global AI power struggle.
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| Malaysia backs away from Huawei AI chip deployment amid U.S. export control pressure, highlighting its strategic role in the AI tech rivalry between superpowers. Image: BP |
KUALA LUMPUR, Malaysia, May 25, 2025:
Malaysia has abruptly reversed its high-profile announcement to deploy Huawei’s artificial intelligence (AI) infrastructure, highlighting the mounting pressure smaller nations face amid intensifying U.S.-China technology rivalries.
On Monday, Deputy Communications Minister Teo Nie Ching declared Malaysia would be the first nation to activate Huawei’s Ascend GPU-powered AI servers at scale, with 3,000 units planned by 2026. She also noted that Chinese AI startup DeepSeek would provide one of its models for deployment in the country.
However, just a day later, Teo’s office retracted the statement without providing any explanation. Huawei later confirmed that it had not sold any Ascend chips to Malaysia and that no government contracts were in place. The retraction comes amid escalating efforts by the United States to block China from expanding its AI and semiconductor influence across the globe.
David Sacks, President Donald Trump’s AI and crypto advisor, reacted swiftly on social media, stating that Malaysia’s announcement revealed how close Chinese tech had come to global market penetration. He praised the administration’s repeal of Biden-era semiconductor export controls as “just in time.”
The U.S. Commerce Department recently issued guidance warning foreign governments and companies that using Huawei’s Ascend chips could violate American export laws. Although the original statement warned against usage “anywhere in the world,” that phrasing was quietly softened following diplomatic tensions with Beijing.
Huawei has emerged as a formidable AI contender, gaining momentum since launching its Mate 60 Pro chip in 2023. Its Ascend AI chips are widely used within China and increasingly seen as a challenge to Nvidia’s global dominance. Even Nvidia CEO Jensen Huang acknowledged Huawei as one of the world’s most advanced tech firms, noting that China is “right behind” the U.S. in AI development.
The Trump administration has responded with urgency, recently announcing plans to ship hundreds of thousands of Nvidia and AMD AI chips to Gulf allies such as the UAE and Saudi Arabia—regions with ambitious AI strategies. While these deals require export licenses and have drawn bipartisan scrutiny, they represent a key prong of Trump’s AI diplomacy.
At the same time, Malaysia is under increased scrutiny for allegedly serving as a conduit for illegal chip shipments to China. U.S. officials have identified the country as a transshipment risk, and Malaysian authorities are now investigating a Singaporean fraud case involving AI servers that may have bypassed export controls.
Teo’s walk-back underscores Malaysia’s tightrope act: it is a key target for American tech investment—Oracle, for instance, is building massive data centers there—but it also maintains robust ties with China. The Biden-era AI diffusion framework limited how much foreign capacity U.S. firms could house in countries like Malaysia. Trump’s team is now revising those rules, reportedly creating exemptions in exchange for security guarantees.
As Washington and Beijing compete to dominate the future of artificial intelligence, Malaysia’s brief flirtation with Huawei’s technology may signal deeper geopolitical shifts still to come.