Malaysia's data center sector maintains an optimistic outlook despite new US export restrictions on artificial intelligence (AI) chips, which were implemented in the final days of President Joe Biden's administration.
Industry outlook
According to The Edge, Malaysia's investment ministry is actively working with stakeholders and US officials to address potential challenges arising from the country's Tier Two classification under the new regulations. Deputy Minister Liew Chin Tong emphasized that existing data centers would continue operating normally under the national validated end user (NVEU) designation. The US rules establish a three-tier system for AI chip supply, with Tier Three (non-VEU) countries facing the most stringent controls.
Market response
Zaobao reports that major data center operators, including YTL Power and Mah Sing Group, expect their ongoing projects—particularly their Nvidia partnerships—to continue unimpeded. However, market analysts remain divided on the long-term implications. While JPMorgan has downgraded Malaysian construction companies due to concerns over potential decreases in foreign investment, China Galaxy Securities suggests the impact may be limited, noting that many data centers do not require advanced AI capabilities.
The restrictions appear to have minimal immediate effect on Singapore's data center industry, where numerous facilities are already operational, pointing to a measured but positive regional outlook under the new export framework.