US authorities crack down on Nvidia chip smuggling ring with $1M payment traced to China

Two Chinese nationals have been arrested for smuggling Nvidia's AI chips to China despite US export controls. The duo allegedly used a California shell company and received payments from Hong Kong and mainland China. The H100 chips require US government approval and the defendants are accused of falsely labeling shipments as compliant. The case highlights Washington's efforts to tighten controls on China's access to cutting-edge semiconductors.

Two Chinese nationals, Chuan Geng and Shiwei Yang, were arrested in California for allegedly smuggling millions of dollars' worth of Nvidia's advanced AI chips to China, despite stringent U.S. export controls. The duo, operating through a California-based shell company called ALX Solutions, was charged with exporting the chips without the necessary licenses from the U.S. Commerce Department [1].

The arrests highlight the U.S. government's ongoing efforts to tighten controls on China's access to cutting-edge semiconductors. Nvidia's H100 chips, which are optimized for large artificial intelligence models, are subject to U.S. export restrictions due to their potential military applications [2]. The defendants are accused of falsely labeling shipments as compliant with export regulations, a practice that has become increasingly common as China seeks to acquire advanced technology [3].

ALX Solutions, founded in 2022, allegedly shipped over 200 Nvidia H100 chips to shipping and freight forwarding companies in Singapore and Malaysia between October 2022 and July 2025. These countries are often used as transit hubs for illegal shipments to China [1]. The company received payments from China-based firms, including a $1 million payment in January 2024, rather than from the freight forwarding companies [1].

The case underscores the challenges faced by the U.S. in enforcing its export control regulations. Despite recent escalations, Chinese companies have continued to obtain Nvidia GPUs through smuggling, with reports suggesting that over $1 billion worth of chips were obtained through such means in just three months [2]. The U.S. is now considering embedding location-tracking technology directly into high-end chips to address these loopholes [2].

The arrests of Geng and Yang also raise concerns about the broader implications of U.S. export control policies. Nvidia CEO Jensen Huang has criticized the current restrictions, arguing that overregulation accelerates China’s domestic chip development and erodes America’s long-term advantage [2]. The delicate balance between controlling technology flow and fostering innovation remains a significant challenge for U.S. policymakers.

References:
[1] CNN. (2025, August 7). Chinese nationals arrested selling Nvidia chips to China. Retrieved from https://www.cnn.com/2025/08/07/us/chinese-nationals-arrested-selling-nvidia-chips-hnk
[2] Tom's Hardware. (2025, July 2). The White House considers chip tracking to curb AI hardware smuggling to China. Retrieved from https://www.tomshardware.com/tech-industry/white-house-considering-chip-tracking-to-curb-ai-hardware-smuggling-to-china-amid-enforcement-gaps-software-or-hardware-tracking-could-be-next-step-in-u-s-export-controls-over-leading-edge-ai-silicon
[3] BBC News. (2025, August 7). Two Chinese nationals arrested for smuggling AI chips to China. Retrieved from https://www.bbc.com/news/articles/c4gm921x424o