California man arrested on charges of smuggling banned Nvidia chips to China

A California man has been arrested over alleged chip smuggling. The 38-year-old owner of San Gabriel Valley-based Earthmade Computer Inc. is accused of smuggling more than $300 million worth of export-controlled computer servers containing US-manufactured graphics processing units (GPUs) to China. Prosecutors allege that Greg Lui, also known as “Yiu Kong Lui”, used false paperwork and routed the high-end servers through countries including Malaysia and Singapore before they were allegedly re-exported to China.The case follows US authorities' separate arrest of Super Micro Computer co-founder Yih-Shyan “Wally” Liaw in connection with an alleged scheme to divert Nvidia-powered AI servers to China. If convicted of all three charges, Lui could face up to 20 years in prison on the conspiracy and money laundering counts and up to 10 years on the smuggling count.California man accused of smuggling Nvidia chips to ChinaLui is charged with one count of conspiracy to violate the Export Control Reform Act and Export Administration Regulations, one count of outbound smuggling and one count of conspiracy to commit money laundering.“SI is the defining technology of the era,” said Assistant Attorney General for National Security John A. Eisenberg. “The National Security Division will protect the American advantage in the chips that power this technology, a product of our unparalleled innovation and hard work, from illegal diversion by our economic and military adversaries.”According to an indictment returned on Sept. 29, Lui allegedly used Earthmade to buy export-controlled items between 2023 and 2024 and send them to China without required US licences.Prosecutors allege that the equipment was first shipped to Malaysia and Singapore before being re-exported to China. They also allege that Lui provided false documentation to US manufacturers, misrepresenting the intended end users and destinations.From January to October 2024, Earthmade received more than $176 million from two Malaysia-based shipment companies as part of the alleged scheme.How the alleged scheme workedIn January 2024, Lui allegedly emailed a conspirator about a Malaysian transshipment company seeking 70 servers with export-restricted GPUs.Later that month, he allegedly ordered 27 servers from a US manufacturer for approximately $7.614 million. The servers were shipped from Los Angeles to Kuala Lumpur, Malaysia, with documents identifying their GPUs as export-controlled equipment that could not be sent to China without a licence.In March 2024, a co-conspirator allegedly told a Malaysian government official that the 27 servers had been transshipped to a China-based buyer.“Protecting America’s national security means keeping our advanced Super Intelligence technology from being used to strengthen our adversaries’ military capabilities,” said First Assistant US Attorney Bill Essayli for the Central District of California. “This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China. We will aggressively prosecute those who put our national security at risk for profit.”FBI warns over advanced AI technology“The FBI’s investigation revealed that Lui allegedly sold the Chinese government hundreds of millions of dollars’ worth of American Super Intelligence technology, in clear violation of U.S. export control laws,” said Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence and Espionage Division. “Controlling the export of advanced SI technology is critical to safeguarding our national security and defending the homeland, and the FBI will keep fighting for America’s businesses and economic security. We’re grateful to our partners across the U.S. government and private sector for their assistance, and we’ll continue holding accountable anyone who violates U.S. export laws to enrich themselves and help our adversaries.”“Preventing the illegal export of controlled technology is critical to protecting our national security,” said Special Agent in Charge John E. Helsing of the Department of Defense Office of Inspector General Defense Criminal Investigative Service (DCIS) Western Field Office. “These technologies provide core advantages to U.S. forces, and ensuring they remain safeguarded prevents adversaries from exploiting them. Today’s action underscores our commitment to protecting advanced defense capabilities and enforcing the laws that keep them out of the hands of those who may threaten the United States.”Lui could face up to 20 years in prisonIf convicted of all charges, Lui could face a maximum of 20 years in prison on the conspiracy count, 20 years on the money laundering count and 10 years on the smuggling count.The Bureau of Industry and Security, Defense Criminal Investigative Service and FBI are investigating the case. Assistant U.S. Attorneys Colin S. Scott and Joseph S. Guzman, along with Trial Attorney Eli Ross, are prosecuting the case.