Singapore's GPU smuggling probe and its effects on Malaysia

What's the impact of Singapore's GPU smuggling probe on Malaysia's data centre market? That depends on who you're talking about.

Singapore taking it seriously

I wrote last week about how 3 men were charged for lying on export forms and diverting GPU servers to parties that likely couldn't purchase them.

AI dominance lies at the heart of ongoing efforts by the US to keep technologies such as high-end GPUs from China or a long list of blacklisted Chinese firms.

While Singapore is not legally obligated to enforce the export measures of other countries, it has moved swiftly to protect its access and maintain its reputation.

GPU servers

On Monday, Minister K. Shanmugam revealed additional details: Police were investigating whether servers from Dell and Supermicro installed with the GPUs were exported to Malaysia.

While he emphasised that the ultimate destination of these GPU servers remained under investigation, industry sources connected the cloud provider of one of the 3 charged with a Malaysia data centre operator.

The Tier 2 cloud provider has committed to lease two-thirds of the data centre's capacity, or 10MW. The inference is that the contract could now be in jeopardy.

When the music stops

So what's the likely impact on data centres in Malaysia? I think that depends on whether the workload is live; data centres with operational GPUs should be safe.

If not, the customer could matter:

• US-blacklisted Chinese firms.
• High-density workloads by unknown end-users.

With increased scrutiny, GPUs originally scheduled for delivery might no longer materialise. This could leave some data centre operators in limbo.

Similarly, data centre operators counting on AI workloads could now be left scrambling to target enterprise users instead.

A looming slowdown

So is the Malaysia data centre market in trouble?

It's hard to say with certainty. As I wrote yesterday, new data centres are now built ahead of demand. This means data centre operators will have holding power.

Moreover, a slowdown in the Johor data centre industry might be inevitable due to an overhyped market over the last 2 years. It would hence be imprecise to attribute any bumps solely to Singapore GPU investigation.

What do you think? Will Malaysia bear the brunt of the fallout?