Chinese engineers train AI model in Malaysia using smuggled training data
Chinese AI companies reportedly circumvented US chip export controls by physically smuggling training data on hard drives to Malaysia, where engineers trained an AI model on rented servers with advanced NVIDIA chips before returning the trained model to China.
What happened
In early March 2025, four Chinese engineers flew to Malaysia from Beijing, each carrying a suitcase containing 15 hard drives with a total of 80TB of spreadsheets, images and video clips.
The data was trained on 300 local servers containing advanced NVIDIA chips rented by the engineers' employers, with the intention of building an AI model before returning it to China.
Engineers spent over eight weeks optimizing the data sets and adjusting the AI training program before the data left the country, and reportedly returned home with several hundred GB of data including model parameters.
Reported impact
The operation circumvents US export restrictions on advanced AI chips by using physical data smuggling and rented foreign infrastructure instead of shipping restricted hardware.
Index analysis
The physical transport of training data on hard drives bypassed digital firewalls and surveillance across multiple jurisdictions that monitor digital data transfers.
Governance controls
Malaysia was previously accused of helping China circumvent the NVIDIA AI chip ban, and a ministry investigation was reportedly underway into alleged breaches involving Nvidia's AI chips.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.