The U.S. Department of Justice said Tuesday that two Chinese citizens were arrested in California and charged with illegally transporting tens of millions of dollars worth of artificial intelligence chips, including those produced by Nvidia.
The Justice Department said Chuan Geng, 28, and Shiwei Yang, 28, exported these sensitive chips and other technologies to China between October 2022 and July 2025 without obtaining the required licenses.
According to a criminal indictment filed, the illicit shipments included Nvidia's H100 general-purpose processors, one of the U.S. chipmaker's most advanced chips for artificial intelligence applications.
The U.S. Commerce Department has subject such chips to export controls since 2022 as part of a broader effort to restrict China's access to cutting-edge semiconductor technology.
Nvidia said the case demonstrates that smuggling "doesn't work." "Our products are primarily sold to reputable partners, including original equipment manufacturers (OEMs), who help us ensure that all sales comply with U.S. export controls."
The chipmaker added, "Even relatively small exporters and shipments are subject to thorough scrutiny and auditing, and any diverted products will not receive any service, support, or updates."
Geng Shuang and Jerry Yang's California-based company, ALX Solutions, was founded shortly after the implementation of U.S. chip controls.
According to the U.S. Department of Justice, law enforcement searched ALX Solutions' offices and seized Geng Shuang and Jerry Yang's phones, which revealed incriminating communications between the defendants, including about shipping sensitive chips to China through Malaysia to evade U.S. export laws.
The review also revealed that in December 2024, ALX Solutions shipped more than 20 shipments from the United States to shipping and freight forwarding companies in Singapore and Malaysia. The U.S. Department of Justice alleges that these companies are often used as transshipment points to conceal illegal shipments to China.
Meanwhile, the department stated that ALX Solutions did not receive payment from the entities it purportedly exported goods to, but instead received multiple payments from companies in Hong Kong and mainland China.
The U.S. Department of Commerce's Bureau of Industry and Security and the Federal Bureau of Investigation are continuing their investigations.
Geng Shuang and Yang Hengjun were charged with violating the Export Control Reform Act, a felony punishable by up to 20 years in federal prison. Yang Hengjun was also found to be illegally residing in the United States due to overstaying his visa.
The smuggling of advanced microchips has become a growing concern in Washington. The Financial Times reported last month that at least $1 billion worth of Nvidia chips have entered China since President Donald Trump tightened chip export controls earlier this year.
In response to the report, Nvidia stated that data centers built with smuggled chips are "losing money" and that it does not support unauthorized products.
In response to U.S. pressure, Malaysia said last month it would begin requiring trade licenses for advanced artificial intelligence chips from the United States.