Malaysia is evaluating Huawei artificial intelligence hardware to power its RM2 billion national sovereign AI project.
Sources familiar with the matter indicate that the government seeks full authority over national data.
If this move proceeds, Malaysia would become the first foreign government to officially choose Chinese AI hardware over American options.
Telekom Malaysia selected to operate national AI project
State owned operator Telekom Malaysia was selected through a public tender to manage the backbone infrastructure.
Telekom Malaysia already utilises Huawei equipment within its cloud network, though its existing AI computing service actually runs on Nvidia hardware.
Prime Minister Anwar Ibrahim noted that Malaysia aims to build technological capabilities locally rather than acting strictly as a consumer of overseas tech.
Addressing data sovereignty and US Cloud Act risks
The main driver behind keeping infrastructure local is protecting sensitive government, military, and intelligence data within national borders.
Anwar previously voiced concerns regarding the US Cloud Act, which permits American courts to compel US technology companies to hand over electronic data even when stored overseas.
Establishing a domestic framework ensures sensitive material remains strictly within Malaysian jurisdiction.
Washington raises export concerns over Ascend 910C processors
The hardware under evaluation involves Huawei marquee Ascend 910C chips rather than the limited production Ascend 950 series.
Officials from the Trump administration warned global partners last year that utilising Ascend 910C processors could violate US export regulations.
Washington argues that untrusted suppliers present national security threats when handling sensitive intelligence, and the US is currently preparing competing hardware and financing packages for developing nations.
Diplomatic talks scheduled alongside potential alternative tenders
Officials from Malaysia National Security Council are set to travel to Washington later this month to discuss these concerns with American counterparts.
At the same time, sources state that the government is considering an additional tender process.
This prospective tender would allow US chipmakers like Nvidia and Advanced Micro Devices (AMD) to compete directly for the sovereign AI contract.
Past retractions highlight ongoing diplomatic pressures
This situation echoes previous friction over Chinese technology choices.
In May 2025, Deputy Communications Minister Teo Nie Ching announced a plan to build a national AI system using 3,000 Huawei Ascend chips.
Her office quickly retracted the statement following US pushback, with the Ministry of Investment, Trade and Industry clarifying that the initiative was private.
While the ministry reaffirmed Malaysia sovereign right to act in its national interest, observers are watching closely to see how this current push unfolds.
