appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Iman Muttaqin Yusof

Malaysia’s reported move to use chips from Chinese tech giant Huawei in its 2 billion ringgit (US$494 million) sovereign AI project could test the export-control commitments it signed with Washington last year, analysts say.
The move could complicate Kuala Lumpur’s long-running effort to work with both American and Chinese technology firms, particularly as Washington pushes US AI systems across Southeast Asia.
Bloomberg reported on Monday that Malaysia was seriously evaluating Huawei’s Ascend 910C accelerators as the backbone of its sovereign AI initiative, citing people familiar with the matter.
State-linked Telekom Malaysia was selected as the key operator after a public tender, while officials from Malaysia’s National Security Council are expected to travel to Washington later this month to discuss the issue, the US-based news agency reported.
A separate tender that could give US chipmakers such as Nvidia a more direct opportunity to compete was also under discussion, the report said.

Trade pact clash
Asrul Hadi Abdullah Sani, a political analyst and associate vice-president at strategic advisory firm The Asia Group, said proceeding with Huawei would raise questions over how Malaysia intended to reconcile the move with assurances it had given Washington on export-control enforcement.
Article 5.2 of the Agreement on Reciprocal Trade signed by Prime Minister Anwar Ibrahim and US President Donald Trump last October says Malaysia will, through its domestic regulatory process, “align with all unilateral export controls” imposed by Washington and ensure Malaysian companies do not undermine them. It also calls for cooperation on restricting transactions involving companies on the US Commerce Department’s Entity List, where Huawei has been listed since 2019.
The trade agreement remained unratified by both countries as of July, according to Investment, Trade and Industry Minister Johari Abdul Ghani, who said lawmakers would be briefed before Malaysia decided whether to proceed.
This Week in Asia contacted Johari for comment on the reported Huawei plan but had not received a response by the time of publication.
It would create real friction with Washington
Asrul Hadi Abdullah Sani, political analyst
The US Commerce Department warned in May 2025 that using advanced Chinese computing chips – including Huawei’s Ascend 910C – risked violating US export controls and could expose companies to enforcement action.
“It would create real friction with Washington,” Asrul said. “A government-backed decision to use Huawei chips for the sovereign AI project would reinforce the perception in Washington that these are not isolated commercial choices, but part of a broader shift by Malaysia towards the Chinese technology ecosystem.”
Malaysia’s Digital Ministry proposed the 2 billion ringgit sovereign AI cloud project under the 2026 budget to underpin secure AI infrastructure, protect national data and enable large-scale AI applications.
Anwar has framed the project partly as a response to concerns about foreign jurisdiction over Malaysian data, citing the US Cloud Act, which can compel American technology companies to produce data stored overseas, as a reason Malaysia needed a sovereign cloud for “critical security and personal data”.

Huawei already plays a major role in Malaysia’s digital infrastructure. Telecoms operator U Mobile selected Huawei and ZTE in April 2025 to supply equipment for the country’s second 5G network, while the first nationwide network, run by Digital Nasional, was built with Swedish equipment maker Ericsson.
Anwar also launched Huawei’s AI Lab and Innovation Centre in April, and in July witnessed an agreement between Huawei and Malaysia’s National Cyber Security Agency, covering cybersecurity, cryptology, AI security and digital sovereignty.
Dual-stack dilemma
Asrul said Malaysia could frame Huawei as a sovereign commercial choice based on “cost, availability and control over national data”, but Washington would inevitably view it through the lens of the wider US-China tech war.
Washington launched the US-Asean AI Spark initiative in July, offering financial and technical support to Southeast Asian governments interested in adopting the American AI stack for public-sector use.
A study by Singapore’s ISEAS-Yusof Ishak Institute published last month found that Malaysia was increasingly hosting a “dual-stack” digital ecosystem, with significant US and Chinese workloads onshore and greater exposure to geopolitical pressure over export controls.

Hafidzi Razali, chief executive of policy advisory firm Strategic Counsel, said “whether it leads to a US policy retaliation would depend on the full extent of the scale, usability and whether it actually happens”.
Whichever choice Malaysia made was its right, he added, but it would have to be weighed against “all tangible and intangible possibilities” involving both the US technology sector and Huawei.
Adib Zalkapli, managing director at geopolitical advisory firm Viewfinder Global Affairs, said the Huawei move “could potentially test Malaysia’s balancing act with the US, given ongoing tech rivalry and export controls”. Whether the deal happened would depend on how the US responded to the reported negotiations, he added.
The US was Malaysia’s largest source of approved foreign investment in the first half of 2026 at 33.1 billion ringgit. On Tuesday, Nvidia-backed Firmus announced a multi-year deal with OpenAI to supply computing capacity from two data centres in Malaysia.
Malaysia’s Digital Ministry declined to comment when contacted by This Week in Asia. The Prime Minister’s Office, Telekom Malaysia and Huawei had not responded by publication time.


Malaysia haj fund scandal: ex-religious minister denies role in US$211 million transfer

As Asia rapidly ages, who cares for the carers when they grow old?

Will Malaysia’s Umno pull the plug on coalition partner PH?

Up in smoke: why Southeast Asia failed to halt the haze

Malaysia

Will Malaysia’s potential Huawei AI deal risk clash with US trade pact?

The logo of Huawei Technologies is seen on the facade of a building in Kuala Lumpur, Malaysia. Photo: EPA-EFE

US President Donald Trump and Malaysia’s Prime Minister Anwar Ibrahim hold signed trade documents on the sidelines of last year’s Asean summit in Kuala Lumpur. Photo: AFP

A visitor uses a mobile phone to test 5G speeds at a Huawei 5G Innovation and Experience Centre in London. Photo: Xinhua

A worker walks past a data centre in Malaysia’s Johor state, Southeast Asia’s fastest-growing data centre hub, in May. Photo: Reuters

Reviving Kuala Lumpur: can Malaysia modernise without pricing out its past?

The Petronas Twin Towers and other commercial buildings as seen from KL Tower in Kuala Lumpur. Photo: AFP

The changing streetscape around Abdul Razak Gold House in central Kuala Lumpur in the 1990s. Photo: Handout


An old receipt from S.M. Abdul Rajak Jewellery shows the business at 63 Ampang Street, Kuala Lumpur, before the street became known as Lebuh Ampang. Photo: Handout 

People walk along a shopping street in Kuala Lumpur last year. Urban planners aim to create spaces where visitors want to linger for longer. Photo: AFP

Abdul Razak Gold House is seen amid the shophouses of Kuala Lumpur’s historic commercial district. Photo: Handout 

A woman walks past Masjid Jamek Sultan Abdul Samad (background, centre) next to commercial buildings in Kuala Lumpur. Photo: AFP

Huawei and Malaysia’s 5G future: unpacking the embrace of Chinese tech

Malaysia has been under significant US pressure to reconsider any future relationship with Huawei. Photo: Shutterstock

The Huawei logo is seen near the US embassy in Kuala Lumpur, Malaysia. Photo: EPA-EFE

A woman walks past a logo of Maxis at its headquarters in Kuala Lumpur, Malaysia. Photo: Reuters

Malaysia’s Prime Minister Anwar Ibrahim shakes hands with Chinese President Xi Jinping in Beijing last year. Photo: Xinhua

People use their mobile phones in Bangkok. Thailand’s largest mobile operator announced a collaboration with Huawei earlier this month Photo: Bloomberg

A person tests the speed of Huawei 5G at an event in London, England. Photo: Xinhua

Malaysia’s Communications Minister Fahmi Fadzil has indicated that a decision on the 5G tender will be made soon. Photo: AFP

An Ericsson branded robot at a trade fair. The Swedish company won the contract to develop Malaysia’s first 5G network in 2021. Photo: dpa

Chinese Premier Li Qiang arrives at the Kuala Lumpur International Airport on June 18. Photo: Xinhua

Anwar Ibrahim looks at semiconductor wafers on display during the opening of the Infineon Technologies’ new semiconductor complex in Kulim, Malaysia, in August. Photo: Bloomberg

Donald Trump returning to the White House after next month’s US elections could complicate Malaysia’s bid to position itself as a geopolitically neutral jurisdiction. Photo: Getty Images/TNS

Construction work under way last year in Kelantan, Malaysia, on the East Coast Rail Link. Photo: Xinhua

My way or the Huawei: how US ultimatum over China’s 5G giant fell flat in Southeast Asia

A surveillance camera in front of Huawei’s factory campus in Dongguan, Guangdong province. Photo: Reuters

Small toy figures are seen in front of a displayed Huawei and 5G network logo in this illustration picture, March 30, 2019. REUTERS/Dado Ruvic/Illustration

L to R: Allen Xie Lun Yi, Director of Learning Service, Southern Pacific, Rita Irina Wahab, Director of PACD, Michael Yuan, CEO of Huawei Malaysia, YB Dr Ong Kian Ming, Deputy Minister of International Trade and Industry, Leong Kwong Onn, Director of MGTC, You Yang, Director of Global Service Resource Centre

Click to enlarge

An engineer from EE the wireless network provider, owned by BT Group Plc, checks 5G masts and Huawei Technologies Co. 5G equipment, bottom left, overlooking St. Paul's Cathedral during trials in the City of London, U.K., on Friday, March 15, 2019. Europe would fall behind the U.S. and China in the race to install the next generation of wireless networks if governments ban Chinese equipment supplier Huawei Technologies Co. over security fears, according to an internal assessment by Deutsche Telekom AG. Photographer: Simon Dawson/Bloomberg

This Week in Asia

Politics

News

Asia

Southeast Asia

The reported move, tied to a US$494 million sovereign AI project, underscores Kuala Lumpur’s superpower balancing act


The reported move, tied to a US$494 million sovereign AI project, underscores Kuala Lumpur’s superpower balancing act.


Will Malaysia’s potential Huawei AI deal risk clash with US trade pact?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The reported move, tied to a US$494 million sovereign AI project, underscores Kuala Lumpur’s superpower balancing act

The reported move, tied to a US$494 million sovereign AI project, underscores Kuala Lumpur’s superpower balancing act