Malaysia’s AI darling NationGate sees shares tumble after it got raided in a scrap metal smuggling probe
Shares of NationGate Holdings, Nvidia’s only manufacturing partner in Southeast Asia, took a beating this week after the company disclosed a raid into one of its subsidiaries by Malaysian authorities.
On Tuesday, Nationgate admitted that the Malaysian Anti-Corruption Commission (MACC) raided the premises of NationGate Solution, a wholly-owned subsidiary, as part of an ongoing investigation into scrap metal smuggling.
Nationgate’s shares fell 14% on Tuesday to reach 1.45 Malaysian ringgit ($0.34). Shares pared back losses over the rest of the week, but are still down over 10% from Tuesday.
On Thursday, NationGate stated that the raids did not involve any specific board members or senior management, and that the company didn’t expect a significant hit to its finances or operations.
In a response to Fortune, a spokesperson from NationGate Holdings said that it is an electronic manufacturing services company and that scrap metal trading has never been part of the company’s business.
The spokesperson added that the MACC visit to NationGate Holdings’ subsidiary is part of an industry wide investigation, and that as a responsible corporate citizen, NationGate is giving full assistance to the MACC investigation.
Malaysia’s state news agency Bernama reported on Tuesday that the MACC launched a crackdown on scrap metal smuggling syndicates operating in five states that have resulted in an estimated tax revenue loss of 950 million Malaysian ringgit ($223.9 million). The report added that preliminary investigations revealed these syndicates exported scrap metal to India, China and other countries but reported them as machinery or other metals not subject to the 15% export tax imposed by the government.
NationGate, ranked No. 243 on the Southeast Asia 500, was the fastest-growing company on Fortune’s ranking of the region’s largest companies by revneue. 2024 sales surged 720% to reach 5.3 billion Malaysian ringgit ($1.6 billion), largely thanks to surging growth in its data computing segment.
NationGate is the only company in Southeast Asia that assembles Nvidia’s highly sought-after graphic processing units (GPUs) into AI servers. Nvidia’s GPUs are the most used in high-performance AI applications.
But the AI boom and the link to Nvidia are also a risk for NationGate. In early March, Malaysia and neighboring Singapore faced U.S. allegations of being channels for controlled chips to make their way to China. U.S. officials were reportedly interested in whether DeepSeek, the scrappy Chinese AI startup, got its hands on Nvidia processors it wasn’t supposed to have.
Singapore’s Law and Home Affairs Minister K Shanmugam said in March that servers containing chips subject to U.S. export controls appeared to have been sent to Malaysia. Malaysia’s Trade Minister Tengku Zafrul Abdul Aziz then said officials were investigating and vowed to take necessary action.
Separately, Singapore has also charged three men with fraud for allegedly misrepresenting the end-user of computer servers that may contain Nvidia chips.
On Monday, Malaysia announced that all exports of high-performance U.S. AI chips will now require permits for exports, and that individuals and companies must notify the government at least 30 days prior to shipping such hardware.
NationGate has distanced itself from the subject and has clarified that it’s not involved in any investigations. Yet investors are still spooked. NationGate’s shares are down over 40% year-to-date.
Update July 19, 2025. This article has been updated with a statement from NationGate Holdings.
This story was originally featured on Fortune.com