11-05-2026 
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TL;DR: Malaysia seized $12.19 million in smuggled AI chips, 50.5% of Taiwanese adults use generative AI, and Alphabet (NASDAQ: GOOGL) lost over $500 billion on its worst-ever market day, stoking fears of an artificial intelligence (AI) bubble despite Google Cloud revenue more than doubling.
Key Takeaways:
- Malaysia seized 30 servers containing about $12.19 million worth of advanced AI chips at KLIA on October 15.
- Malaysia controls AI chip exports under the Strategic Trade Act 2010, adopted under U.S. pressure to block rerouting to China.
- 50.5% of Taiwanese adults used generative AI in the past six months, and 39.8% of users pay for it.
- ChatGPT (56.6%) and Gemini (34.6%) hold over 90% of Taiwan’s generative AI usage.
- Alphabet fell over 12% on October 29, losing over $500 billion, the second-largest single-day market loss ever.
- Google Cloud revenue grew 103% to $30.7 billion, even as search growth missed expectations.
The specter of artificial intelligence continued to haunt the global narrative in the lead-up to Halloween, as Malaysia cracked down on AI chip smugglers, Taiwanese adoption boomed, and a Google tumble stoked fears of the AI bubble bursting.
Malaysia seizes AI chips
Malaysia’s customs department seized 30 servers containing about 49.5 million ringgit ($12.19 million) worth of advanced AI chips, as authorities clamp down on a syndicate suspected of smuggling high-performance semiconductors through the country’s main airport.
Malaysia introduced permit requirements for the export, transit and transshipment of high-performance AI chips of United States origin in 2025. The powers were provided for under Section 12 of the Strategic Trade Act 2010 (STA 2010), a Catch-All Control provision which requires individuals or companies to notify the relevant authority at least 30 days before exporting, shipping, or bringing in transit any item not listed in the Strategic Items List (SIL)—an official government inventory of goods, software, and technology that are restricted from free export, transit, or transshipment—if they know or suspect the item will be misused, or used for a restricted activity.
According to an October 28 report from local outlet Malay Mail, the Customs Department at Kuala Lumpur International Airport (KLIA) said the most recent seizure was made following an inspection of a warehouse in the KLIA Free Trade Zone on October 15.
Customs director Aspalila Ag. Tuah told the press that the servers had been brought in from an Asian country under a single air waybill declaring them as electronic components, allegedly to evade detection by the authorities, before being re-exported to another Asian country.
“The syndicate also used Malaysia as a transit point to ensure there were no restrictions on the export of the servers to their next destination,” Aspalila said.
Senior assistant director of the Investment, Trade and Industry Ministry Strategic Trade Secretariat, Masyita Ismail, reportedly also commented that the high-performance AI chips were subject to strict controls because they were classified as dual-use items.
“The Strategic Trade Act 2010 regulates dual-use items, which can be used in the development of weapons of mass destruction,” Masyita said, adding that the brands, countries of origin and destinations of the chips could not be disclosed as investigations were ongoing.
The inclusion of advanced AI chips into the remit of the STA 2010 Act was a move made under pressure from the U.S. to ensure the technology isn’t rerouted to China through third countries. Washington has sought to restrict China’s access to advanced semiconductors to curb Beijing’s AI and military capabilities.
In October 2023, the U.S. Department of Commerce issued a statement on its implementation of additional export controls, saying that “these revisions protect U.S. national security interests by further restricting China’s ability to obtain critical technologies to modernize its military capabilities in ways that threaten the national security interests of the United States and its allies.”
While the U.S. frets about China’s AI capacity, Taiwan is proving to be a case study in the adoption of the technology.
More than half of Taiwanese use AI tool
Just over half of Taiwanese adults have used generative AI tools in the past six months, according to a Taiwan Fair Trade Commission (TFTC) survey released October 29.
Titled “Behavioral Survey of Consumer Use of Generative Artificial Intelligence Tools,” the survey found that the overall adoption rate of generative AI (gen-AI) tools in Taiwan is approximately 50.5%, and that 39.8% of users have paid for a subscription.
Of this usage, OpenAI’s ChatGPT and Google’s Gemini together accounted for over 90%, with ChatGPT at 56.6% and Gemini at 34.6%, respectively. Multi-platform use has become the norm, with most respondents—individuals aged 18 and older residing in any of Taiwan’s 22 counties and cities who had used a gen-AI tool within the preceding six months—reporting that they had used or tried multiple tools at the same time.
The survey was conducted from May 6 to 28, 2026, to better understand consumers’ choices in using gen-AI tools and the patterns of demand substitution among them.
According to the TFTC—the Taiwanese government agency responsible for competition policy, antitrust regulation, and the investigation of unfair trade activities—it yielded 1,079 valid samples, noting that generative AI tools have “grown rapidly in recent years.”
The primary motivations for this surge in usage were “acquiring knowledge or learning” and “work,” with the main reasons for choosing a particular brand being that it “provided services or functions that met personal needs.”
The TFTC said it would continue to monitor market developments, adding that the survey was designed to build on the “Public Consultation Report and Policy Statement on Generative Artificial Intelligence and Competition” that it released in March 2026.
Global trends back up the Taiwanese stats. Based on a recent Microsoft (NASDAQ: MSFT) report tracking global AI diffusion for Q2 2026, 18.8% of the world’s working-age population (ages 15 to 64) has used a generative AI product, up from 17.8% in Q1 2026.
Yet despite this apparent boom time for AI usage, fears of an imminent AI bubble continue to grow, with Google’s recent stock decline adding fuel to the fire.
Google’s bad day provides a Halloween scare
On October 29, shares in Google’s parent company, Alphabet, plummeted, marking the company’s worst-ever day on the U.S. stock market and erasing over $500 billion in market value.
The drastic fall of more than 12% was the second-biggest daily market cap loss ever, behind only Nvidia’s (NASDAQ: NVDA) $593 billion loss on January 27, 2025—another AI powerhouse.
The sell-off followed Alphabet’s third-quarter results, which, on paper, were strong: revenue rose 25% to $127.6 billion, and Google Cloud revenue more than doubled to $30.7 billion. However, investors apparently focused on the weaker numbers, such as search revenue growing 12%, below the 15% analysts had expected; capital spending more than doubling year-on-year to $51.4 billion; and free cash flow coming in at negative $9.1 billion, according to Fortune.
Other stocks fell too, further spooking the market. ServiceNow sank 27% on the same day, its worst session on record, after results that revived fears of AI disruption, while Salesforce (NASDAQ: CRM) dropped 4.6% and Workday lost 4%.
The sell-off deepened on Friday, as Intel (NASDAQ: INTC) fell roughly 29% and was headed for its worst day since 1974, while Amazon (NASDAQ: AMZN) reported a cash burn of more than $42 billion over the 12 months to September (at the time of writing).
Combined with Google’s historically bad day, this broader tech tumble was seen as another sign of the AI bubble’s imminent burst, with the concern that the largest tech companies are spending on AI faster than it is paying them back.
Comparisons have also been drawn with the “dot-com bubble” of the late 1990s and early 2000s, when investors poured money into internet companies on the assumption that technological innovation would inevitably translate into enormous profits, but as expectations failed to materialize, valuations collapsed, wiping trillions of dollars from the stock market.
Some concerned observers believe the current AI boom is displaying similar warning signs, namely extraordinary company valuations, enormous infrastructure investments, increasingly complex financing arrangements, and expectations of future profits that may prove difficult to justify.
Whatever the reasons, the week that rounded off October appears to have at least demonstrated that investors are no longer satisfied with announcements of bigger AI budgets or increasingly powerful models; they want evidence that these investments are generating sustainable revenue and profits.
For now, declaring the AI bubble officially burst is likely premature, as Alphabet’s Google Cloud business, for example, recorded 103% revenue growth in the latest quarter, demonstrating that demand for AI infrastructure remains substantial.
FAQs:
Why did Malaysia seize AI chips?
Customs seized 30 servers worth about $12.19 million at KLIA, suspecting a syndicate had smuggled them in, declaring them as electronic components, for re-export to another Asian country.
What law controls AI chip exports in Malaysia?
The Strategic Trade Act 2010. Its catch-all provision requires 30 days’ notice before exporting or transiting items suspected of misuse, including U.S.-origin high-performance AI chips.
Why is Malaysia restricting AI chip exports?
Under U.S. pressure, Malaysia aims to stop advanced chips from being rerouted to China through third countries. The chips are classified as dual-use items.
How many people in Taiwan use generative AI?
About 50.5% of Taiwanese adults used it in the past six months, per a Taiwan Fair Trade Commission survey. Roughly 39.8% of users pay for a subscription.
Which AI tools are most popular in Taiwan?
ChatGPT leads with 56.6% of users, followed by Google Gemini at 34.6%.
Why did Google’s stock crash on October 29?
Alphabet fell over 12% after search revenue grew 12% versus the 15% expected, capital spending more than doubled to $51.4 billion, and free cash flow turned negative.
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Watch: What Do People Actually Use AI For?
