California man smuggled $300 million in Nvidia chips to China, prosecutors say
Prosecutors say Yiu Kong Lui conspired with foreign shipping companies to trick US manufacturers into selling him the chips.
A California man, Yiu Kong Lui, has been charged with aiding the smuggling of $300 million in Nvidia chips to China, according to prosecutors. It is illegal to export advanced semiconductor chips into China without authorization, as the United States competes with China in the artificial intelligence (AI) field. The arrest of Lui, 38, from San Gabriel, California, occurred on Thursday; he is scheduled for arraignment in federal court and faces charges of export control violation, smuggling, and money laundering, as per court documents.
Exporting Nvidia's chips to China is prohibited because the company's hardware excels in AI data centers due to its ability to perform multiple calculations concurrently and its widely compatible software stack. This practice became contentious when President Donald Trump permitted Nvidia to sell chips to China, diverging from the policy under President Joe Biden, which strictly barred such exports. US authorities allege that Lui endangered national security by facilitating the smuggling of these chips.
The FBI and US officials emphasized that controlling the export of advanced semiconductor technology is crucial for protecting national security and defending the homeland. Roman Rozhavsky, an assistant director of the FBI's counterintelligence and espionage division, stated that the bureau remains committed to safeguarding American businesses and economic security.
The indictment, a 22-page document, details how Lui collaborated with several co-conspirators who utilized shell companies to transport the chips through Malaysia or Singapore before delivering them to China. A company owned by Lui acted as a middleman between foreign shipping companies and US chip manufacturers. Lui reportedly deceived US companies, asserting that the chips would not reach China, a claim prosecutors dispute.
The operation reportedly commenced in 2023 and concluded in August. The indictment specifies that Lui's company received over $180 million from Malaysian shipping firms acting as intermediaries in these transactions. Should Lui be convicted on all charges, he could receive a maximum sentence of 50 years in prison. Nvidia's response to the charges was dismissive, with the company highlighting that cooperation with law enforcement led to prosecutions and asserting its intention to continue working with authorities.
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