A California man was arrested on Thursday on federal charges of smuggling more than $300 million in advanced Nvidia computer chips to China, in a scheme prosecutors said routed the hardware through Malaysia and Singapore to evade American export controls.
The man, Greg Lui, 38, of San Gabriel, ran a company called Earthmade Computer Inc. that ordered servers built around Nvidia’s A100 and H100 processors, as well as GeForce RTX 4090 and 5090 graphics cards, from American manufacturers, according to a 22-page indictment unsealed this week. Business Insider, citing court records, identified him as Yiu Kong Lui. He is scheduled to be arraigned in federal court, and it was not clear on Friday whether he had a lawyer.
Exporting the chips to China without a Commerce Department license is illegal. Mr. Lui’s company instead sent them to Malaysia and Singapore, where no license is required, and freight companies there forwarded them to China, prosecutors said.
The operation ran from October 2023 until at least Aug. 12, according to the indictment, which leans on emails, shipping records and bank statements. In one 2024 order for 70 servers with export-restricted chips, Mr. Lui submitted a purchase order to an American manufacturer for 27 of them, at a cost of $7,614,000. A co-conspirator later told a Malaysian government official that all 27 had been shipped to China, prosecutors said.
Another 92 export-controlled servers flew from San Francisco International Airport to Kuala Lumpur, with paperwork for the onward shipment through Hong Kong listing a Chinese customer. The F.B.I. said the chips ended up with a company in Hangzhou, the city The Wall Street Journal has called China’s A.I. hub.
A third shipment tells the most about the paperwork. For 100 servers containing H100 processors worth more than $22 million, Mr. Lui used fraudulent documents from a fake buyer whose chief executive was listed as “Jackie Lui,” prosecutors said. The buyer, a California company called Topmost, had been registered by the chief technology officer of one of the Malaysian freight companies. Three years earlier, the indictment said, Mr. Lui bought another person’s identity documents and used them to conduct business for the scheme.
For brokering the deals, Mr. Lui’s company received more than $176 million from two Malaysian trans-shipment companies, according to court documents; Business Insider reported the figure as more than $180 million. Payment records from his accounts at Bank of America and JPMorgan trace the money, prosecutors said, and the Justice Department wants to seize all of it.
Mr. Lui is charged with conspiring to violate the Export Control Reform Act and the Export Administration Regulations, with smuggling and with money laundering. The counts carry maximum sentences of 20, 10 and 20 years, or 50 in all. He has not entered a plea.
John A. Eisenberg, the assistant attorney general for national security, said the National Security Division would “protect the American advantage in the chips that power this technology” from what he called illegal diversion by economic and military adversaries. He called the technology “super intelligence,” or SI, using the administration’s new term for artificial intelligence, and said it would be “the defining technology of the era.”
Roman Rozhavsky, an assistant director of the F.B.I.’s counterintelligence and espionage division, said Mr. Lui “allegedly sold the Chinese government hundreds of millions of dollars’ worth” of the technology and that controlling its export was “critical to safeguarding our national security and defending the homeland.”
The case lands in a running fight over Nvidia, whose chips can run many calculations at once and have become the standard for training large A.I. models. The Biden administration moved to block nearly all exports of advanced chips to China; President Trump relaxed the rules last year and let Nvidia sell there, drawing criticism.
Nvidia said in a statement that the case showed “yet again that smuggling is a losing proposition,” legally, economically and technically, and that it would keep working with law enforcement. A spokesman told Bloomberg that less than half of 1 percent of the company’s products had been diverted, “a drop in the bucket compared to the ocean of domestic compute China already has.”
Bloomberg, reporting from interviews with dozens of people across five countries, described gaps in Nvidia’s screening anyway. In Taiwan, the F.B.I. said, Nvidia and Supermicro approved sales to a facility “clearly insufficient to house all the ordered servers” that were passed on to a Chinese firm before Taiwan’s Coast Guard seized most of the shipment. In Thailand, a small data center bought in bulk on fake leases. And Nvidia continues to sell to Megaspeed, a company the U.S. government suspects is diverting chips to China; the company said it would keep working with Megaspeed until ordered to stop.
“A startup’s growth plan in a friendly nation is an opportunity for America, not a ‘red flag’ to be feared,” the Nvidia spokesman told Bloomberg.
Industry pressure has already watered down one anti-smuggling bill in Congress, Bloomberg reported, and Nvidia’s chief executive, Jensen Huang, recently declined an invitation to testify about the problem. Mr. Lui, for his part, is due in court.