US Justice Department Captures Two Alleged Smugglers of Nvidia AI Chips
By Vlad Savov, Bloomberg
The United States Department of Justice has apprehended two individuals accused of contravening export control regulations by attempting to illicitly transport artificial intelligence chips valued at approximately $160 million from Nvidia Corp. to China. A third individual, the proprietor of a Houston-based enterprise, has already entered a guilty plea.
According to allegations from the department, the defendants orchestrated a smuggling operation that connected the Houston business managed by Alan Hao Hsu with various warehouses across the country.
In this scheme, authentic Nvidia labels from the H100 and H200 AI chips were obscured and replaced with the fictitious “Sandkyan” brand prior to shipment.
Fanyue Gong, a Chinese national residing in Brooklyn, New York, alongside Benlin Yuan, a Canadian from Ontario, purportedly conspired with personnel from a logistics firm based in Hong Kong and an AI technology company located in China to evade US export restrictions.
This development underscores the critical significance of such chips, which have become pivotal in the intensifying competition between Beijing and Washington.
Historically, the US has escalated restrictions on exports to China—particularly prior to the recent easing of regulations under President Donald Trump—arguing that these exports pose a national security threat. Consequently, these measures have led to Nvidia, along with its competitors, incurring billions in lost revenue.
Nvidia’s Hopper series of AI chips was initially spearheaded by the H100, followed by the enhanced H200 version launched in 2023.
Notably, the DOJ’s Office of Public Affairs disclosed these allegations concurrently with Trump’s announcement that H200 sales to select Chinese customers would be permitted for the first time.
US Attorney Nicholas Ganjei remarked, “Operation Gatekeeper has unveiled a sophisticated smuggling infrastructure that jeopardizes our nation’s security by supplying advanced AI technologies to entities that may exploit them against American interests.
These chips represent the cornerstone of AI dominance and are vital for contemporary military applications.
Santa Clara-based Nvidia has transitioned to its Blackwell family of chips and is preparing for an additional generational leap in 2026. Trump indicated this as a rationale for maintaining US technological preeminence, even while extending certain privileges to China.
Jensen Huang, CEO of Nvidia, has persistently advocated for the expansion of sales to China, arguing that the diffusion of what he refers to as the American technology stack benefits global advancement.
He has also consistently asserted that he has not observed any instances of Nvidia’s semiconductors being rerouted to the Chinese marketplace.
An Nvidia spokesperson stated on Monday, The export framework we employ is both stringent and all-encompassing. Even transactions involving older generational products on the secondary market undergo thorough examination.
While millions of controlled GPUs operate across businesses, residences, and educational institutions, we remain committed to collaborating with the government and our clients to prevent any illicit secondary smuggling.
Source link: Mercurynews.com.
