In a significant development, the U.S. Department of Justice has brought charges against two Chinese individuals residing in California for their alleged involvement in a substantial operation to illegally export sophisticated artificial intelligence chips manufactured by Nvidia Corporation to China. This illicit trade, valued at approximately $28 million, purportedly bypassed stringent American export regulations. The accused allegedly utilized deceptive practices, including fabricating customer information and attempting to reroute shipments through Southeast Asian nations, to circumvent restrictions aimed at curbing China's advancements in military AI capabilities. Both Nvidia and its supplier, Super Micro Computer, have affirmed their cooperation with authorities, underscoring the serious implications of such breaches for national security and international trade compliance.
\nUS Authorities Uncover Sophisticated AI Chip Smuggling Operation
\nOn a recent Tuesday, the U.S. Department of Justice announced the indictment of Chuan Geng and Shiwang Yang, both 28, on charges related to the illegal export of high-end AI chips, including Nvidia's H100 processors, to China. These actions directly contravene U.S. Commerce Department regulations designed to control the flow of sensitive technology. The elaborate scheme, active from October 2022 to July 2025, involved more than twenty separate consignments, collectively valued at tens of millions of dollars. Operating under the guise of ALX Solutions, a California-based company established shortly after the implementation of U.S. export restrictions, Geng, a permanent U.S. resident, and Yang, who had overstayed her visa, allegedly acquired over 200 Nvidia H100 chips from Super Micro Computer in San Jose. They reportedly fabricated documentation, falsely claiming that the end-users were located in Singapore and Japan. Investigations revealed that one such invoice, declaring a value of $28.4 million for a Singaporean customer, pointed to a non-existent entity and confirmed that the shipment never reached its purported destination. Nvidia, through a company spokesperson, emphasized that any diverted products would not receive official support, service, or updates, reiterating its commitment to compliance with U.S. export controls. Super Micro Computer has also pledged full cooperation with the ongoing investigation. Geng was released on a $250,000 bond, while Yang's detention hearing is scheduled for August 12. This case emerges amidst a broader context of illicit chip trade, with reports earlier this year estimating over $1 billion worth of Nvidia chips clandestinely reaching China through black markets, even as the U.S. administration considers granting new licenses for certain AI chip exports to China.
\nThis incident serves as a stark reminder of the persistent challenges faced by governments in enforcing technology export controls, particularly in the rapidly evolving landscape of artificial intelligence. It highlights the ingenuity of those seeking to circumvent regulations and the critical importance of robust enforcement mechanisms. For industry leaders like Nvidia, maintaining the integrity of their supply chains and ensuring compliance with international trade laws is paramount, not only for business continuity but also for upholding ethical standards and national security interests. This case underscores the need for continuous vigilance and adaptive strategies to counter sophisticated illicit networks and safeguard advanced technological assets.