US charges California man with smuggling $300 mln in Nvidia AI chips to China

Source: Bloomberg

Federal prosecutors arrested a California man on Thursday, charging him with violating U.S. export controls by smuggling computer servers equipped with Nvidia Corp. artificial intelligence chips—valued at $300 million—to China.

According to authorities, Greg Lui, owner of the private company Earthmade Computer Inc., collaborated with unidentified co-conspirators between 2023 and 2024 to ship servers containing restricted chips to Chinese buyers without obtaining the required U.S. licenses.

The charges against Lui are the latest in a series of federal prosecutions targeting alleged violations of export controls designed to prevent advanced U.S. chips from reaching China for national security reasons. In March, authorities charged a co-founder of Super Micro Computer Inc. with illegally diverting billions of dollars' worth of Nvidia chips to China. He has pleaded not guilty.

Lui, 38, is expected to be arraigned later Thursday. The Department of Justice stated that he faces one count of conspiracy to violate U.S. export controls, one count of smuggling goods from the United States, and one count of conspiracy to commit money laundering. Prosecutors argued in court filings that Lui should be detained without bail due to a "serious risk of flight."

"The defendant allegedly used false documents and transshipments through third countries to smuggle over $300 million worth of export-controlled computer servers into China," said Bill Essayli, the Chief Assistant U.S. Attorney in Los Angeles. "We will aggressively prosecute those who harm our national security for profit."

The DOJ said Lui and others initially exported the equipment to Malaysia and Singapore—jurisdictions that do not require licenses for purchasing advanced AI chips from U.S. companies. The servers were then shipped to end buyers in China. Prosecutors allege Lui knew the chips were subject to U.S. export restrictions when arranging the server sales. As part of the scheme, authorities claim Lui and his co-conspirators provided false documents to U.S. manufacturers, misrepresenting the final destination of the products.

In one purchase order, Lui obtained 27 servers equipped with Nvidia H100 GPUs from an unidentified U.S. manufacturer, valued at approximately $7.6 million.

The charges were announced jointly by federal prosecutors, the FBI, and the Department of Commerce's Bureau of Industry and Security. If convicted on all counts, Lui could face more than 20 years in prison. The court docket did not list an attorney for Lui. A representative for Nvidia did not immediately respond to a request for comment.

Case: United States v. Lui, 26-cr-00618, U.S. District Court, Central District of California (Los Angeles).