malaysia's data center pivot: ai chip access at stake
Kuala Lumpur, Friday, 12 September 2025.
malaysia is pumping the brakes on data center expansion, a move with major implications for china’s ai ambitions. the us commerce department is concerned that overseas data centers are being used to sidestep export controls. this could allow chinese entities to train ai models, potentially for military applications. the decision impacts nvidia, a key player in ai chips. more than two-thirds of southeast asia’s data center construction is happening in malaysia. this policy shift could reshape the ai landscape.
investment landscape in malaysia
Malaysia’s move introduces uncertainty for investors in data centers and related technology [1]. While the country aims to attract over $40 billion in AI and data center investments by 2030, this policy shift may impact investor confidence [2]. The U.S. is experiencing its own data center boom, with construction spending reaching $40 billion in June, a 30% increase from the previous year [7]. Malaysia’s actions could divert some of this investment away from Southeast Asia, particularly if concerns about trade tensions persist [1].
nvidia’s exposure and market dynamics
NVIDIA (NVDA) stands to be significantly affected, given its reliance on data center chip sales [1][7]. Restrictions on data center growth in Malaysia could translate to altered demand patterns for NVIDIA’s high-performance chips. This situation adds another layer of complexity to the global semiconductor supply chain. It also forces investors to re-evaluate NVIDIA’s growth prospects in the Asia-Pacific region. The company’s stock may face volatility as the market digests this new regulatory environment [GPT].
geopolitical considerations and strategic responses
The situation highlights the delicate balance between economic cooperation and national security concerns [1]. Lee Ting Han, Johor state’s data centre development coordination vice chair, suggested that Chinese firms might be ‘rebranding’ to diversify their client base amid trade tensions [1]. Vivian Wong, a senior analyst at DC Byte, noted that increased scrutiny and tariffs in Southeast Asia could diminish the success of Chinese-backed operations [1]. These strategic maneuvers reflect the evolving geopolitical landscape and its direct impact on investment strategies [GPT].
regional it capacity and johor’s role
Johor, a key data center hub in Malaysia, has approved 42 projects worth 164.45 billion ringgit ($39.08 billion) as of the second quarter of 2025 [1]. These projects contribute 78.6% of the country’s operational IT capacity [1]. As of December 2024, Johor had 12 operational data centers with a combined capacity of 369.9 MW, with plans for 28 more, potentially adding 898.7 MW [1]. Any slowdown in Johor’s data center expansion will have ripple effects throughout Malaysia’s IT sector and could affect investor returns [alert! ‘These numbers could be affected by the new policy’].