Malaysian firms risk losing
over half their revenue if
they violate US restrictions
Expert says the Nvidia chip scandal in Singapore serves as a reminder to Malaysian companies that it is essential to strengthen their compliance measures.
Harald Sippel, a senior foreign adviser with Aqran Vijandran — a legal firm specialising in commercial and corporate law — said once a company comes under such a list, it effectively cuts off its access to critical suppliers, technology, and financial services.
Many international partners, including banks, insurers and logistics providers, will refuse to do business with a listed company to avoid secondary sanctions, he said.
“This does not just result in a loss of existing business but also denies these companies of future opportunities.
“For exporters of technology and electronics, the inability to reach key foreign markets like the US or the European Union can be catastrophic, as alternative markets may have weaker demand or offer lower profitability,” he told FMT.
Sippel was commenting on the Singaporean Nvidia chip scandal, which he said served as a timely reminder for Malaysian businesses to strengthen their compliance measures.
The chips were allegedly planted in servers supplied by Dell and Supermicro to Singapore-based companies before being shipped to Malaysia, according to reports by Singaporean publications.
The chips are at the centre of a US probe into Chinese AI firm DeepSeek to determine if it purchased advanced Nvidia semiconductors through third parties in Singapore, skirting Washington’s restrictions.
However, investment, trade and industry minister Tengku Zafrul Aziz said there was nothing to indicate that the Nvidia artificial intelligence chips in servers were transferred to Malaysia from Singapore as claimed.
Sippel — who previously wrote that sanctions represent a more profound risk compared to tariffs — said that being included in the restricted list is just one half of the problem.
The other issue is how to get off the list, to enable business operations to resume as normal, he said, adding that the process is both complex and time-consuming.
He said companies must demonstrate full compliance, implement remedial measures, and in many cases, file petitions with regulatory bodies such as the US Department of Commerce.
“The process takes multiple months to years, with no guarantee of success. In some cases, companies remain restricted indefinitely, especially if violations involve US security concerns.”
Sippel went on to say that non-compliance by Malaysian firms to strict export controls could also lead to loss of export privileges, which would have a significant impact on business operations.
Losing export privileges means that a company cannot legally export its products or receive critical foreign components, which can cripple operations, he said.
Sippel said firms dependent on international supply chains could see production grind to a halt due to a lack of raw materials, software, or parts.
“It can also affect financing, as banks may see the company as high-risk and restrict access to credit or trade financing.”
Sippel said for businesses that regularly export technology or high-tech components, understanding both Malaysian and US export control frameworks is now more critical than ever, given that proactive compliance “will not only protect businesses from penalties but also ensure they maintain a strong reputation in global markets”.
Back in 2005 under the Badawi Administration, Malaysia legislated a mutual recognition of Export controls with US.
ReplyDeleteIt was and is key to Malaysia participating in US technology manufacturing business
Looks like Madani is not taking this seriously, taking the tune "we don't recognise US sanctions"
Malaysia is skating on thin ice ignoring US restrictions on nVidia chips and products using the nVidia chips exports