Malaysia has withdrawn a plan to use Huawei AI servers across the country after making a public announcement about it. The sudden change highlights the pressure Malaysia faces in the ongoing tech battle between the United States and China.
On May 20, Deputy Communications Minister Teo Nie Ching said Malaysia would use 3,000 Huawei AI servers powered by Ascend chips. These would be placed across the country by 2026. If completed, Malaysia would have been the first country to roll out Huawei’s AI chips nationwide.
Just one day later, the Malaysian government pulled back the statement without giving a reason. Huawei also said it had not sold any of its Ascend chips to Malaysia. It confirmed that no agreements had been made.
The decision comes during rising concern from the United States. U.S. officials have warned countries about using Chinese technology, especially from Huawei. There are fears that Huawei’s products could be used to support China’s influence in other regions.
The U.S. Commerce Department had recently shared warnings that using Huawei’s AI chips might break export control laws. These laws limit the sale of U.S.-based technology to certain foreign countries. Although the message was later softened, it still showed how serious the U.S. is about protecting its tech sector.
Malaysia’s move also comes as the U.S. investigates how restricted chips may be reaching China through other countries. Both Malaysia and Singapore are being watched for possible illegal transshipment of semiconductors. These are chips that might have been sent to China even though they are banned.
If found true, such actions could lead to problems in trade between the U.S. and these nations. Malaysia may be trying to avoid such issues by stepping back from Huawei for now.
Huawei has grown fast in Southeast Asia. It has helped build 5G networks and digital systems in countries like Indonesia, the Philippines, and Thailand. These projects are usually cheaper and faster than those from U.S. firms, making Huawei an attractive partner.
Still, some countries have already changed course. Vietnam is working more with American chip makers. Singapore has been cautious in its use of Chinese tech. These examples show how countries are adjusting to the global tech race.
Malaysia has not said exactly why it reversed its decision. But experts believe the country wants to avoid breaking any international rules. It may also want to protect its relationships with key partners like the United States.
In the long term, Malaysia is trying to grow its digital economy. But doing so means making tough choices. It must manage both U.S. demands and its business ties with China.
The global tech race between the U.S. and China is putting countries like Malaysia in a hard place. They must decide how to build their futures without picking sides. Malaysia’s recent decision shows just how complicated that has become.
