California man charged for smuggling NVIDIA chips to China
What's the story
A California man, Greg Lui, has been charged with illegally exporting $300 million worth of NVIDIA's artificial intelligence chips to China. The US Department of Justice (DOJ) announced the charges on Thursday. The DOJ accused Lui, the owner of Earthmade Computer Inc. and unnamed co-conspirators of violating US export controls by shipping restricted computer servers to buyers in China without necessary licenses from 2023 to 2024.
Legal implications
Lui faces over 20 years in prison
Lui has been charged with conspiracy to violate US export controls, outbound smuggling, and conspiracy to commit money laundering. If convicted on all counts, he could face over 20 years in prison.
The DOJ argued that Lui should be detained without bail due to "serious risk" of flight if released.
First Assistant US Attorney Bill Essayli said, "This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China."
Smuggling scheme
Servers first shipped to Malaysia and Singapore
The DOJ said that the servers were first shipped to Malaysia and Singapore, where no licenses were required for advanced AI chips from US companies. From there, they were sent to China.
Prosecutors alleged that Lui provided false documents to US manufacturers, misrepresenting the final destination of the products.
In one instance, he purchased 27 servers with NVIDIA H100 GPUs for around $7.6 million from an unidentified US manufacturer.
Investigation progress
Case against Lui follows similar prosecutions
The charges against Lui come after a series of federal prosecutions aimed at enforcing export controls on advanced US-made chips.
In March, a co-founder of Super Micro Computer Inc. was charged with illegally diverting billions of dollars in NVIDIA chips to China.
The case against Lui is being investigated by the Commerce Department's Bureau of Industry and Security, Defense Criminal Investigative Service, and FBI's Counterintelligence and Espionage Division.