A California man has been arrested for smuggling over $300 million worth of restricted Nvidia chips to China in violation of U.S. export controls. According to a U.S. Department of Justice (DoJ) press release on October 1, the defendant — Greg Lui, also known as Yiu Kong Lui — and unidentified co-conspirators smuggled the chips in high-end servers from 2023 to 2024. He allegedly first exported the chips to Malaysia and Singapore, jurisdictions where the restrictions don't apply, before shipping them to buyers in China, including the Chinese government.Authorities say the defendant, owner of California-based company Earthmade Computer Inc., and his co-conspirators had used false paperwork to misrepresent the chips’ final destination, purporting that the controlled chips would be going to permissible end users and end destinations that did not require an export license. “This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China,” said First Assistant U.S. Attorney Bill Essayli for the Central District of California.The DOJ has charged Lui with “one count of conspiracy to violate the Export Control Reform Act and the Export Administration Regulations, one count of outbound smuggling, and one count of conspiracy to commit money laundering.” If convicted of all charges, the defendant could face up to 20 years in prison. He was arraigned and made his initial appearance on October 1. The FBI, the Department of Commerce’s Bureau of Industry and Security Office of Export Enforcement, and the Defense Criminal Investigative Service are jointly investigating the case.The incident is the latest in a series of indictments over the illegal export of restricted AI accelerators and GPUs to China. Last month, nine people were indicted in Taiwan over the illegal export of Nvidia B300 GPUs to China. The United States and its allies had placed broad export restrictions on several AI chips and the hardware required to make them in an effort to maintain its current lead over China in the AI race. China, meanwhile, insists the move has only bolstered its local AI ecosystem. However, the demand for powerful Nvidia GPUs remains sky-high in China and has created a teeming market for smuggled hardware.Speaking on the Liu incident, Special Agent in Charge John E. Helsing of the Department of Defense Office of Inspector General Defense Criminal Investigative Service (DCIS) Western Field Office said, “Preventing the illegal export of controlled technology is critical to protecting our national security. 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.”