Chinese AI companies are reportedly smuggling hard drives to Malaysia in order to train their AI models without technically breaking the export controls that the U.S. has placed on advanced Nvidia chips heading into China. According to the Wall Street Journal, four Chinese tech workers flew in from Beijing to Kuala Lumpur, each one carrying 15 hard drives with 80 TBs worth of data each for training an AI model. This amounts to about 4.8 PB of information, which is enough for several large-scale LLMs.

This was a meticulously planned operation and took several months of preparation. Sources say that the engineers chose to fly in the data on hard drives, because it would take a lot of time to transfer the data online without attracting attention. They then divvied up the hard drives between four passengers to avoid raising alarm bells with Malaysian customs and immigration officers. The Chinese personnel then proceeded to a Malaysian data center, where their company rented 300 Nvidia AI servers to process the data and build the AI model.

The involved companies also made some legal moves to muddy the waters. The Chinese AI company had previously used the same process to train its model using the Malaysian data center, with its Singapore-registered subsidiary signing the rent agreement. But with Singapore clamping down on AI tech exports, the Malaysian company asked its Chinese client to register locally and avoid scrutiny.


Despite Nvidia claims, Chinese smugglers have used live lobsters and fake baby bumps to traffic electronics
Setting up a local operation and manually bringing in the data on hard drives makes training more complicated than doing it in China. However, the U.S.’s bans are making it harder for companies to import the advanced hardware they require for AI training. Despite Nvidia’s claims that “there is no evidence of chip diversion”, there is a healthy black market in China for smuggled Nvidia chips, and they’re able to get them through subsidiaries and other companies based in nearby countries.

Still, doing this requires a lot of money, especially as the increased risk means suppliers likely put a premium on the servers they sell. It has also reportedly become more difficult recently because of the pressure that the White House has been putting on these countries. So, instead of importing the hardware, the next best option for some of these Chinese companies is to export the data instead.

Moves like this show how difficult it is for the U.S. to enforce the export bans that it has put on these powerful chips. More than that, the U.S. Senate has found out that the Commerce Department is woefully underfunded and has been ineffective at enforcing these controls. Although it seems that Washington’s sanctions are slowly starting to take effect with increased enforcement, the fact that Chinese companies take these steps to circumvent AI chip bans shows that the White House has got its work cut out for itself.

https://www.wsj.com/tech/china-ai-chip-curb...tcases-7c47dab1


https://www.tomshardware.com/tech-industry/...-rented-servers

This post has been edited by premier239: Jun 14 2025, 06:49 PM

Weird. They cannot buy hard drive in Malaysia?

The data is in China, the need to use the data centre hardware to process it

to train their AI models without technically breaking the export controls that the U.S.

so another loophole to close?

Jensen already giving up on China market.

Brought in hdd with data. Bring here to use MY based AI servers to process.

Why cant use cloud storage based in China?

This post has been edited by MGM: Jun 14 2025, 03:52 PM

lol smart

They cannot buy the advanced AI chips in China, so they bring their AI model here to train it using data centers in Malaysia.

what's the problem...?

wats the evidence?

Must be Deepsheek.

Trump dengki

I would say
1. They would not trust cloud provider that can link to outside of china firewall with their data either thinking that the information was important or either full of copyright infringement that can be used against them
2. Those cloud provider may need to abide to both China and US regulation, can u trust one that play both side.

Anyway Malaysia boleh, for s hort sweet can act interstation. How long time can our MITI minster buy us before getting sanctioned of the sweet spot.

Why need to bring in manually, can always import in the hdd as brand new empty hdd.

If chinese do it, it's "smuggle". If angmoh do it, say it's bukak data centre. Ok

sooner or later msia sure kena from US

Totally Lawless

Avoid kena trace. Don’t leave evidence.

But their HDD so small? 15 HDD = 80tb.

Probably doing it in their walled city in malaysia

I thought they already have what LJ chips already?

80 TBs worth of data each

EACH