MIDF Research said Friday that the scrapping of the rules under the Framework of AI Diffusion is a positive development as far as the data center value chain is concerned.
“For one, we believe there will be looser restrictions on the allocation of artificial intelligence (AI) computing power by tech giants,
“This means the US-based hyper scalers may no longer be tied down to the 7 percent restriction of AI computing power to any country outside Tier 1, which allows for more AI capacities to be planned in other countries such as Malaysia,” the research house said in a note.
For Malaysia, in terms of country-based allocations, it all boils down to how the government to government (G2G) negotiations turn out, said MIDF.
It is noted that the AI Diffusion Rule states that countries will be subject to a cumulative maximum installed base allocation of 790m total processing performance (TPP).
“Under certain circumstances, this may be doubled to 1.58b TP. Using Nvidia’s H100 chips as a benchmark, these translate to 49,899 and 99,798 chips respectively,
“There is no clarity on whether this would be repealed, but news reports have mentioned that the Trump administration intend to impose curbs on countries that have diverted chips to China, including Malaysia and Thailand,” the research house said.
While awaiting further clarity on how the Trump administration refashions the AI Diffusion Rule, MIDF viewed it as a positive development for now, considering that the earlier rule set by Biden will not be enforced on May 15.
The removal of the 3-tier country system will also allow tech giants to better plan their AI-enabled data center allocations, without the restrictions in place, it added.
It is noted that the Trump administration plans to rescind some AI chip curbs that was introduced by former President Joe Biden before he left office, also known as the Framework for AI Diffusion.
The framework was planned to come into effect on May 15, but it was reported that the Trump administration will not enforce the framework on that date and is drafting its own version of the rules.
Bloomberg reported that this will likely focus on direct negotiations with nations like the United Arab Emirates (UAE) or Saudi Arabia while Reuters reported a week ago that Trump’s officials may remove the 3-tier country system, replacing it with a licensing regime based on G2G agreements.