Skyvast's US$160 million AI infrastructure project draws govt clarification on Malaysia's technology stance

Malaysian government distances itself from private Skyvast-Huawei AI project while reaffirming commitment to WTO principles and export control compliance US$160M initiative deploys 3,000 GPUs and DeepSeek LLM but lacks official government endorsement amid geopolitical scrutiny

A US$160 million AI infrastructure project launched by Malaysian tech company Skyvast has prompted the government to clarify Malaysia's position on technology partnerships amid growing international scrutiny over the use of Chinese AI components.

The Ministry of Investment, Trade and Industry (MITI) issued a statement May 21, two days after the project was launched, distancing the government from the private-sector initiative, which involves deploying 3,000 units of Huawei's AI chips by 2026 alongside the first implementation of Chinese startup DeepSeek's large language model outside China.

"The project was not developed, supported or managed by the government and is not part of any official or national programme," MITI stated, following earlier remarks by Deputy Communications Minister Teo Nie Ching at the launch event that suggested government backing.

Announced on May 19 at Kuala Lumpur, the Skyvast-led consortium includes partnerships with Huawei and Chinese chip validation firm Leadyo. The initiative has invested US$100 million across cloud infrastructure and the Malaysia-China Trusted Data Zone, with US$60 million allocated for accelerated GPU deployment—500 units this year, 2,000 in 2025, reaching 3,000 by end-2026.

The project centers on the AlterMatic DT250 AI Server, equipped with eight high-end GPUs delivering 20% more compute power while consuming 30% less energy than global alternatives. Plans include establishing the Malaysia-China Trusted Data Zone linking Cyberjaya with Shanghai's Lin-gang Special Area, and an off-grid Perlis Advanced Tech Park powered by 1.6GW solar infrastructure and 4.875GW battery storage.

However, the project has attracted unwanted geopolitical attention. Bloomberg reported that the announcement caught the attention of the US government, which is working to prevent China from capturing foreign AI markets.

The report noted that David Sacks, US President Donald Trump's AI advisor, used the project to validate concerns about China's growing technological reach. The controversy intensified following recent US Commerce Department guidance warning overseas companies against using Huawei's Ascend chips, though the broad warning was later modified after Chinese objections.

In response, MITI emphasized Malaysia's commitment to navigating these sensitivities carefully. "Malaysia remains committed to full compliance with all applicable export control laws, national security directives, and emerging guidance from global regulatory authorities, especially those that uphold the highest standards of transparency, accountability, neutrality and security, premised upon the principles of multilateralism with the World Trade Organisation at its core," the ministry stated.

This positioning reflects Malaysia's delicate balancing act in maintaining technological partnerships while adhering to international frameworks. The government's clarification suggests Malaysia seeks to avoid being perceived as aligned with any single technology bloc while preserving its right to make independent policy decisions.

"Malaysia also reaffirms its right to formulate its policies in line with national interest while facilitating transformative technologies that continue to support global research and innovation," MITI added.

The project's GPU resources are planned for equal distribution between public and private sectors, with early adopters including government agencies like the Prime Minister's Office and Universiti Teknologi Malaysia, despite the lack of official endorsement.

For Malaysia's technology sector, the episode highlights the increasingly complex geopolitical landscape surrounding AI infrastructure investments. While the private initiative proceeds, the government's response demonstrates its awareness of the need to navigate between technological advancement and international compliance requirements.

The situation underscores Malaysia's broader challenge of maintaining technological neutrality while building advanced digital capabilities in an environment of intensifying US-China technology competition.