Malaysia’s data centre dreams hit by tariffs, chip ban fears, trade tensions

[KUALA LUMPUR] Rising electricity tariffs and the proposed US ban on artificial intelligence (AI) chip exports to South-east Asia are raining on the parade of Malaysia’s booming data centre sector, as the dual pressures force hyperscale operators to reassess the country’s value proposition as a digital investment hub.

Still, some observers reckon Malaysia’s dominant position in emerging South-east Asia is unlikely to be dramatically shaken, as demand for cloud computing remains robust.

While industry experts point out that the US move to curb AI chip exports from Malaysia – part of efforts to stop suspected smuggling into China – is still in a draft stage and remains speculative, its chilling effect, combined with a sharper-than-expected power tariff hike just this month, is already cooling the gold rush.