U.S. authorities arrested two Chinese accused of illegally transporting millions of dollars’ worth of microchips used in artificial intelligence applications to China.
Chuan Geng and Shiwei Yang, both 28, were charged over the weekend for violating the Export Control Reform Act. According to a criminal complaint filed by the Justice Department, between October 2022 and last month, the suspects exported “sensitive technology” without obtaining the proper license or authorization through the U.S. Commerce Department.
Violating the act carries a maximum penalty of 20 years in prison, according to a criminal complaint filed by the DOJ.
While Mr. Geng is a lawful permanent resident, Ms. Yang is an illegal alien who overstayed her visa, according to the Justice Department.
According to the complaint, Ms. Yang and Mr. Geng illegally transported several popular microchips used in AI development, including Nvidia’s H100 general processing unit. The H100 is widely considered one of the strongest GPUs on the market for AI applications, especially in the training of large language models.
The chips were allegedly shipped through California-based ALX Solutions Inc., which was founded shortly after the Commerce Department issued strict export controls on powerful chips like the H100 in 2022. The DOJ alleges that ALX-connected shipments were tracked to freight-forwarding companies in Singapore and Malaysia, which are commonly used to conceal illegal shipments to China.
“ALX Solutions has not received payments from the entities to which they purportedly exported goods. Instead, ALX Solutions received numerous payments from companies based in Hong Kong and China, including a $1 million payment from a China-based company in January 2024,” the complaint reads.
Authorities raided the offices of ALX Solutions over the weekend and seized phones belonging to Ms. Yang and Mr. Geng. According to the DOJ, the phones contained incriminating evidence, including “communications about shipping export-controlled chips to China through Malaysia to evade U.S. export laws.”
The arrests come as the Trump administration works to expand export controls on AI chips to limit Chinese access. In January, the Trump team recommended adding location verification to exported AI chips to further prevent the technology from flowing to China.
International partners have also stepped in to prevent the chips from reaching China. Last month, Malaysia announced it would begin requiring trade permits for U.S.-sourced AI microchips entering the country.
Still, reports suggest that smuggling has persisted through Mr. Trump’s heightened export controls. A Financial Times report from July found that AI chips worth over $1 billion have entered China since January.
