A Penang-based electronic manufacturing services company has denied allegations that it moved advanced artificial intelligence chips from the United States to China, saying the claim is untrue. Innospec Sdn Bhd said it only assembles products where all materials are consigned by its customers, and it told FMT that none of the parts involved is sensitive technology moved from the US to China.
The company said parts consigned by one customer cannot be shipped to any other party, except back to the consignor, because it would be held responsible for any missing parts. “As far as we are concerned, we are assembling parts for our customers where none of the parts is sensitive tech (moved) from the US to China,” the firm said. “We do not receive any sensitive or restricted materials consigned by our customers that are assembled into the end product.”
The allegation comes from a New York Times article published on 6 September titled “How a Blacklisted Chinese Tech Giant Kept Buying America’s Best AI Chips”. The report said Innospec received computer chips and parts from Aivres, the American subsidiary of blacklisted Chinese technology firm Inspur, and that those components were then forwarded to Maginfra, a China-based IT company. Washington has restricted the sale of advanced chips to China since 2022.
Innospec is a subsidiary of Kobay Technology Bhd, a publicly listed Malaysian manufacturing and technology group, and said it adheres to the rules and regulations set by the government when conducting its operations.
The same New York Times article named several other Malaysian subsidiaries of regional firms on similar allegations. It said Singapore-based Megaspeed International quietly moved almost US$2 billion worth of Nvidia’s most advanced AI chips through its Malaysian subsidiary Speedmatrix Sdn Bhd, while the Malaysian operations of cloud provider Aolani Cloud were said to have received chips and parts from an Inspur subsidiary before forwarding them to Chinese firms.
The denial lands amid fresh US legal action over the same trade route. The US Justice Department said Greg Lui, 38, who owns California-based Earthmade Computer, was arrested on 1 October 2026 on a three-count indictment returned on 29 September, as ProductNation reported. Prosecutors said Earthmade received more than US$176 million from two Malaysia-based companies between January and October 2024, and that servers were shipped to Malaysia and Singapore, where no US licence was required, before being re-exported to China. The two companies were not publicly identified, and the allegations have not been tested in court.
Malaysia requires a Strategic Trade Permit for the export, transhipment and transit of US-origin advanced AI chips, with exporters required to give the Ministry of Investment, Trade and Industry at least 30 days’ notice under Directive No. 1/2025, issued on 14 July 2025 under the Strategic Trade Act 2010. Innospec said it complies with government rules in its operations.
