According to prosecutors, Geng and Yang coordinated at least 21 shipments through ALX Solutions Inc. to front companies in Singapore and Malaysia, which were then routed to China. One key shipment in December 2024 involved H100 GPUs, Nvidia’s most powerful chips, falsely labeled and lacking a required license from the U.S. Department of Commerce. The firm reportedly received $1 million from a China-based entity in January 2024—despite claims that the goods were destined for Southeast Asian intermediaries.

A Justice Department search of the company’s office and the suspects’ phones uncovered “incriminating communications” referencing strategies to smuggle restricted components to China. These included internal discussions on how to disguise end destinations and payment arrangements designed to obscure the Chinese origin of the transactions.

National Security Tensions Flare Over AI Hardware

The case comes amid heightened U.S. efforts to restrict China's access to high-end AI chips, citing national security risks. Nvidia has emphasized its compliance with export laws, stating it only sells to approved clients and does not support unlicensed transfers. “Smuggling is a nonstarter,” a company spokesperson said, noting that any diverted products would be denied updates or technical support.

While the Biden administration had originally imposed sweeping chip export bans on China, former President Donald Trump has since loosened some restrictions. In July, Nvidia’s CEO Jensen Huang confirmed that Washington had reversed its block on the company’s H20 AI chip—specifically designed for the Chinese market but less powerful than the H100—after talks with Trump.

If convicted, Geng and Yang face a maximum of 20 years in prison under the Export Control Reform Act, as the U.S. ramps up enforcement of its global chip policies amid an intensifying technological standoff with China.