Taiwanese online news platform NowNews recently reported that Malaysia’s rapid data center development is experiencing a major slowdown. This is not only due to energy and water shortages, but also to the U.S.-China competition in the field of artificial intelligence chips.
From Microsoft and Amazon to Tencent and Huawei, global tech giants are betting on Malaysian data centers. However, under the dual pressures of strict U.S. technology controls on AI chip exports and Malaysia’s increased scrutiny of investment projects, China’s use of Malaysia as an “AI backdoor” is facing unprecedented challenges, making this Southeast Asian country a key frontier at the intersection of technology and geopolitics.
Malaysia has become an emerging powerhouse in Southeast Asia due to its low land and electricity prices and proximity to Singapore. Statistics show that more than two-thirds of the data center capacity under construction in the five major markets in Southeast Asia is concentrated in Malaysia.
The United States has been mounting pressure on Malaysia to prevent China from obtaining export-controlled AI chips through overseas data centers. Starting in July of this year, a “Strategic Trade License” must be applied for and a 30-day advance notification must be submitted for all high-end chips exported, reshipped, or transited through Malaysia.
However, the Malaysian and Southeast Asian markets remain attractive to China due to their proximity, high demand, and relatively low political friction. But with the United States tightening regulatory and trade barriers, overseas expansion for Chinese companies is no longer as smooth as it once was.
Source: NowNews, September 13, 2025
https://www.nownews.com/news/6730676