WASHINGTON, July 5 -- US President Donald Trump's administration plans to restrict shipments of AI chips from companies like Nvidia Corp to Malaysia and Thailand as part of an effort to crack down on suspected semiconductor smuggling into China.

A draft rule from the Commerce Department seeks to prevent China - to which the US has effectively banned sales of Nvidia's advanced AI processors - from obtaining those components through intermediaries in the two South-east Asian nations, according to a Bloomberg report citing people familiar with the matter.

Officials plan to pair the Malaysia and Thailand controls with a formal rescission of global curbs from the so-called AI diffusion rule, which drew objections from US allies and tech comp...