Malaysia’s government has swiftly distanced itself from a controversial AI project using Huawei technology after U.S. warnings about potential export law violations triggered international concern.

At a Glance

• Malaysia’s Ministry of Investment, Trade and Industry declared the Huawei-linked AI infrastructure project “not developed, endorsed, or coordinated by the government”
• The strategic AI initiative initially involved Huawei’s Ascend chips but references to the Chinese tech giant were removed after announcement
• U.S. Commerce Department warned that using Huawei Ascend chips could violate export control laws as they may contain restricted American technology
• China responded by threatening to enforce its anti-sanction law against those upholding U.S. sanctions on Huawei
• The situation highlights Malaysia’s position in the middle of escalating U.S.-China tech rivalry

Government Distances Itself from Huawei Project

The Malaysian government has taken swift action to clarify its position on a national artificial intelligence initiative that would have utilized technology from Chinese tech giant Huawei. In an official statement released Wednesday, the Ministry of Investment, Trade and Industry (MITI) emphasized that the AI infrastructure project was “not developed, endorsed, or coordinated by the government of Malaysia.” This announcement came shortly after U.S. officials raised concerns about the potential use of Huawei’s Ascend chips in the country’s AI systems.

The clarification represents a significant shift from Malaysia’s earlier stance. Just days before, the country had announced its Strategic Artificial Intelligence Infrastructure project with plans to deploy Huawei’s Ascend GPU-powered AI servers across the nation. Following the announcement, references to Huawei were quickly scrubbed from reports, signaling growing caution about the partnership. The ambitious initiative originally aimed to roll out 3,000 Ascend chips by 2026, which would have marked a substantial technological transformation for Malaysia.

U.S. Department of Commerce guidelines threatening punitive measures against users of Huawei's Ascend AI chips globally have significantly impacted Malaysia's plans for its Strategic Artificial Intelligence Infrastructure project.

Initially announced as the first deployment of… pic.twitter.com/fX0aLf2RQW

— US Ship of State (@US_ShipOfState) May 22, 2025

U.S. Export Control Warnings

The controversy stems from recent guidance issued by the U.S. Commerce Department, which warned that the use of Huawei’s Ascend chips could potentially violate American export control laws. U.S. officials contend that these chips may have been developed using restricted American technology, making their transfer and use subject to U.S. export regulations. This warning effectively puts countries like Malaysia in a difficult position, caught between technological advancement opportunities with China and maintaining good relations with the United States.

In response to the Malaysian government’s backtracking, Huawei issued a denial that it had exported any Ascend chips to Malaysia. This statement came amid growing pressure from Washington to prevent the global adoption of Chinese AI technology. MITI further emphasized that any AI infrastructure development in Malaysia would comply with global legal standards and export control laws, signaling the country’s commitment to navigating the complex international regulatory landscape.

Escalating Tech War Between Global Powers

The situation in Malaysia illustrates the broader technology war between the United States and China, with developing nations often caught in the crossfire. Following the U.S. warnings about Huawei’s AI chips, China’s Ministry of Commerce issued a stern response, threatening countermeasures against those who enforce American sanctions on Chinese technology companies. This escalating tension places countries like Malaysia in precarious diplomatic positions as they attempt to modernize their technological infrastructure.

The U.S. is actively promoting its own AI technology internationally as an alternative to Chinese offerings. This effort reflects the strategic importance of artificial intelligence in future economic and military competition. For Malaysia and other developing nations, these geopolitical complexities create significant challenges in technology policy. As countries seek to advance their digital capabilities, they must carefully navigate relationships with both technological superpowers while ensuring compliance with an increasingly complicated web of international regulations.