Malaysia’s aspirations to emerge as a regional leader in artificial intelligence (AI) are increasingly intertwined with the complex geopolitical dynamics of the ongoing technological rivalry between the United States and China. A recent incident involving a deputy minister’s remarks regarding a planned AI collaboration with Huawei Technologies has brought to the forefront the delicate balancing act that Malaysia must perform as it strives to enhance its technological capabilities.
Initial Announcement and Subsequent Retraction
The initial announcement, delivered by Deputy Communications Minister Teo Nie Ching, revolved around Malaysia’s ambitious initiative to launch a comprehensive AI ecosystem. This project was presented as a pioneering endeavor in the region, leveraging Huawei’s cutting-edge chips and servers, in conjunction with the DeepSeek large language model, outside of China’s borders. The collaboration was positioned as a pivotal step forward in Malaysia’s efforts to build its strategic AI infrastructure.
However, the enthusiasm surrounding the announcement proved to be fleeting. A mere day later, Bloomberg reported that Teo was retracting her statements concerning Huawei, without offering any explanation for the sudden reversal. This unexpected retraction cast a shadow of doubt over the future of the project and triggered questions about the factors that had influenced the government’s decision.
Adding another layer of complexity to the situation, a Huawei representative asserted that the company had not sold its Ascend chips in Malaysia, and that the government had not made any purchases of these chips. This statement further obfuscated the situation and ignited speculation regarding the nature and scope of the planned collaboration.
US Export Control Concerns
The retraction of the Huawei announcement coincided with a surge in concerns regarding US export controls on advanced AI chips. The US Department of Commerce had recently issued guidelines cautioning companies that utilizing Huawei’s Ascend chips could expose them to the risk of violating these controls.
These guidelines emphasized the US government’s commitment to restricting the flow of advanced technology to China, particularly in strategic areas such as AI, where it aims to maintain its competitive advantage. The US concerns are rooted in the potential use of these technologies to advance China’s military capabilities and erode US dominance in the AI landscape.
Government Clarification
In response to the controversy surrounding the Huawei announcement, the Ministry of Investment, Trade and Industry issued a statement providing clarity on the government’s stance. The ministry emphasized that the AI infrastructure initiative involving Skyvast, a Malaysian company, and Huawei was a “privately driven” endeavor.
The statement went on to assert that the initiative was not developed, endorsed, or coordinated by the Government of Malaysia, nor did it constitute part of any Government-to-Government agreement or nationally mandated technology program. This clarification was intended to distance the government from the project and alleviate concerns regarding potential violations of US export controls.
The ministry also reaffirmed Malaysia’s commitment to adhering fully to all applicable export control laws, national security directives, and emerging guidance from global regulatory authorities. Simultaneously, it asserted Malaysia’s sovereign right to formulate its policies in alignment with its national interests.
US Scrutiny and the AI “Stack”
The initial Huawei announcement attracted the attention of US officials, including David Sacks, a prominent figure in the AI and crypto space during the Trump administration. Sacks reposted a report about the deal and expressed concerns about the potential implications for US competitiveness in AI.
Sacks’ comments underscored the concept of the AI “stack,” which encompasses the collection of tools, technologies, and frameworks necessary for building, training, deploying, and managing AI applications. The concern was that reliance on a “full Chinese stack” could undermine the development and adoption of American AI technologies.
The Trump administration had recently rescinded the AI diffusion rule, which had been launched by the Biden administration and would have created different tiers of access for countries seeking AI chips. The rescission of this rule reflected the US government’s determination to maintain tight control over the export of advanced AI technology.
The US is reportedly aiming to overhaul its rules on the export of AI chips, with the goal of enhancing American AI hardware across the world, while also implementing safeguards to prevent companies building data centers in Southeast Asia or the Middle East from turning to Chinese alternatives.
Malaysia’s Data Center Ambitions and Illegal Chip Flows
Malaysia has emerged as a prominent hub for data center development, particularly in the southern state of Johor. Over the past 18 months, the state has attracted significant investments from companies like Nvidia, Microsoft, and ByteDance, all seeking to establish data centers in the region.
However, Malaysia has also faced challenges related to illegal chip flows. Earlier this year, Singapore charged three men in a fraud case involving the alleged sale of Nvidia chips through Malaysia to China. This incident highlighted the potential for Malaysia to be used as a transshipment point for sensitive technology destined for China.
The US government has vowed to crack down on illegal shipments of advanced Nvidia chips to China via third countries, with officials specifically identifying Malaysia as an area of concern. The US has requested that Malaysia monitor shipments of Nvidia chips to ensure that they are not diverted to unauthorized destinations.
Malaysia’s Minister of Investment, Trade and Industry, Tengku Zafrul Aziz, acknowledged the challenges of tracking semiconductors through global supply chains, which involve multiple parties, including chipmakers, suppliers, and distributors.
The Broader US-China AI Race
The controversy surrounding Malaysia’s AI collaboration with Huawei underscores the broader AI race between the US and China. Both countries are investing heavily in AI research and development, seeking to gain a competitive advantage in this critical technology.
The White House recently announced deals to ship hundreds of thousands of AI chips to Saudi Arabia, with a significant portion of these chips going to Humain, an AI startup launched by Saudi Arabia’s sovereign wealth fund. This move reflects the US government’s efforts to strengthen its partnerships in the AI domain and counter China’s growing influence.
In response to the US warnings against firms using Huawei’s Ascend chips, Beijing has accused the US of “typical unilateral bullying and protectionism,” arguing that such actions undermine the stability of the global semiconductor industry chain and supply chain.
Navigating a Complex Landscape
Malaysia finds itself in a challenging position, caught between the competing interests of the US and China in the technology sector. The country seeks to leverage AI to drive economic growth and improve public services, but it must also navigate the complex web of export controls and geopolitical considerations.
The episode involving the Huawei announcement highlights the need for Malaysia to carefully assess the implications of its technology partnerships and ensure compliance with all applicable regulations. The government must also strike a balance between its desire to attract foreign investment and its commitment to maintaining its sovereignty and pursuing its national interests.
As the AI race between the US and China intensifies, Malaysia will need to develop a clear and consistent strategy for navigating this complex landscape. This strategy should prioritize transparency, accountability, and adherence to international norms and standards. By doing so, Malaysia can maximize the benefits of AI while mitigating the risks associated with geopolitical tensions.
The Malaysian government needs to carefully consider the potential consequences of any technological collaboration, conducting thorough due diligence and risk assessments to ensure compliance with international regulations and alignment with national interests. Malaysia must also proactively engage with both the US and China, fostering open communication and seeking mutually beneficial solutions. By maintaining a neutral stance and promoting collaboration, Malaysia can position itself as a trusted partner in the global AI ecosystem. Investing in domestic AI capabilities is also crucial for Malaysia to reduce its dependence on foreign technologies and foster innovation within its own borders. This could involve supporting local startups, promoting research and development, and developing a skilled workforce in AI-related fields.
The incident serves as a reminder of the interconnectedness of technology, geopolitics, and economic development in the 21st century. As countries around the globe strive to harness the transformative power of AI, they must also be mindful of the potential pitfalls and challenges that come with it. Malaysia’s experience offers valuable lessons for other nations seeking to navigate the complexities of the US-China tech rivalry and forge their own path in the age of artificial intelligence.
Recommendations for Malaysia
Moving forward, Malaysia should adopt a multi-pronged approach to navigating the complexities of the AI landscape and mitigating the risks associated with the US-China tech rivalry.
Transparency and Due Diligence
First and foremost, the Malaysian government must prioritize transparency and due diligence in all of its technology partnerships. This involves conducting thorough assessments of potential collaborators to ensure their compliance with international regulations, adherence to ethical standards, and alignment with Malaysia’s national interests. These assessments should encompass a comprehensive review of the partner’s ownership structure, supply chain, security protocols, and data privacy practices.
Prior to entering into any agreement, the government should engage in open and transparent consultations with relevant stakeholders, including industry experts, academics, and civil society organizations, to solicit their input and address any potential concerns. Transparency also extends to the public disclosure of key details about technology partnerships, such as the scope of the collaboration, the financial terms, and the potential benefits and risks.
Neutrality and Collaboration
To avoid being caught in the crossfire of the US-China tech rivalry, Malaysia should strive to maintain a neutral stance and cultivate strong relationships with both countries. This involves engaging in open communication and fostering collaboration in areas of mutual interest, such as AI research, development, and education.
Malaysia can position itself as a trusted partner in the global AI ecosystem by actively participating in international forums and initiatives aimed at promoting responsible AI development and deployment. This includes working with other countries to establish common standards for AI ethics, data governance, and cybersecurity.
Domestic AI Capabilities
Investing in domestic AI capabilities is crucial for Malaysia to reduce its dependence on foreign technologies and foster innovation within its own borders. This involves supporting local startups, promoting research and development, and developing a skilled workforce in AI-related fields.
The government should provide funding and incentives to encourage Malaysian universities and research institutions to conduct cutting-edge AI research. It should also establish programs to train and upskill workers in AI-related fields, such as data science, machine learning, and natural language processing.
In addition, the government should create a regulatory environment that is conducive to AI innovation, while also protecting consumers and ensuring responsible AI deployment. This includes establishing clear rules for data privacy, cybersecurity, and algorithmic transparency.
Strategic Planning
Developing a clear and consistent strategy for navigating the complex geopolitical landscape of the AI race is essential for Malaysia to achieve its AI ambitions. This strategy should prioritize transparency, accountability, and adherence to international norms.
The government should establish a national AI strategy that outlines its goals, priorities, and action plans for the development and deployment of AI. This strategy should be developed in consultation with a wide range of stakeholders and should be regularly reviewed and updated to reflect changes in the technology landscape.
The strategy should also address the ethical, social, and economic implications of AI, and should include measures to mitigate any potential negative impacts. This may involve establishing guidelines for the responsible use of AI, providing support for workers who may be displaced by AI automation, and addressing issues of bias and discrimination in AI algorithms.
By embracing these principles, Malaysia can navigate the complexities of the US-China tech rivalry and secure its place as a leading player in the global AI landscape.
The Importance of Internal Coordination and Cybersecurity
In addition to the above recommendations, two other key areas require attention: internal communication and cybersecurity.
Strengthening Internal Coordination
The incident underscores the critical importance of clear communication and coordination within the Malaysian government. The conflicting statements from different government officials created confusion and uncertainty, undermining public trust and potentially damaging Malaysia’s reputation as a reliable partner. To avoid similar situations in the future, the government should establish clear protocols for communicating about sensitive technology matters and ensure that all officials are fully informed and aligned on key policy positions.
This could involve establishing a central coordinating body responsible for overseeing all AI-related initiatives and ensuring that all relevant government agencies are working together effectively. Regular meetings and communication channels should be established to facilitate information sharing and collaboration.
Enhancing Cybersecurity Defenses
Finally, the case highlights the need for Malaysia to strengthen its cybersecurity defenses. As the country becomes increasingly reliant on digital technologies, it becomes more vulnerable to cyberattacks and espionage. The government should invest in advanced cybersecurity infrastructure and training to protect its critical infrastructure and sensitive data from malicious actors.
This includes establishing a national cybersecurity strategy that outlines its goals, priorities, and action plans for protecting the country’s digital assets. The strategy should address a wide range of cybersecurity threats, including malware, phishing, ransomware, and denial-of-service attacks.
The government should also work to raise awareness of cybersecurity risks among businesses, individuals, and government agencies.
By addressing these challenges and implementing the recommendations outlined above, Malaysia can mitigate the risks associated with the US-China tech rivalry and ensure that it can continue to pursue its AI ambitions in a responsible and sustainable manner.
Malaysia’s journey in the AI arena is fraught with challenges, yet it also presents remarkable opportunities. By embracing transparency, fostering collaboration, investing in domestic capabilities, and strengthening internal coordination and cybersecurity, Malaysia can navigate the complexities of the geopolitical landscape and emerge as a strong and responsible player in the global AI ecosystem. The path forward requires careful planning, unwavering commitment, and a clear understanding of the stakes involved. As Malaysia charts its course in the age of AI, it must remain vigilant, adaptable, and focused on its national interests, while also upholding its commitment to international norms and ethical principles.