US lawmaker asks Trump administration to help Malaysia crack down on chip smuggling

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By Stephen Nellis

WASHINGTON (Reuters) -A U.S. Republican senator is asking U.S. President Donald Trump’s administration to help the Malaysian government prevent U.S. artificial intelligence chips from being smuggled through the country to China, according to a letter seen by Reuters.

Reuters has previously reported that U.S. officials believe Malaysia is among a handful of countries where organized smuggling operations have worked to get U.S. chips into China that would otherwise be banned from export to China.

Senator Tom Cotton, an Arkansas Republican, wrote a letter to U.S. Commerce Secretary Howard Lutnick saying Malaysian officials had begun cracking down on such activity and the Trump administration should aid Malaysian officials in the effort by helping the country develop screening programs to ensure chips are not being diverted to China. 

Cotton, who along with the Trump administration has supported the idea of requiring U.S. chips to contain technology that would verify their location to prevent smuggling, said chips with such technology should be given a green light for export to Malaysia.

“As is often the case, U.S. companies are at the forefront of developing creative and innovative technical solutions, which will help add layers of assurance against illegal diversion,” Cotton wrote in an October 30 letter. 

“To support the semiconductor industry in their efforts, it may be beneficial for U.S. and Malaysian officials to develop priority customs clearance procedures for shipments of advanced U.S. chips with anti-diversion mechanisms,” Cotton said.

Malaysia, China’s largest trading partner in Southeast Asia, announced in July it was requiring permits for all exports, trans-shipments and transits of U.S.-made high-performance chips, such as those made by Nvidia.

(Reporting by Stephen Nellis in Washington; Editing by Jamie Freed)