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LOS ANGELES (CN) — Two Chinese nationals living in Southern California were charged with illegally shipping tens of millions of dollars worth of Nvidia microchips used in artificial intelligence applications to China without the required license from the U.S. Commerce Department.
Chuan Geng, 28, of Pasadena, and Shiwei Yang, 28, of El Monte, are charged with violating the Export Control Reform Act, the U.S. attorney’s office in Los Angeles announced Tuesday.
Among the restricted Nvidia products they are accused of exporting to China is the Nvidia H100, the most powerful graphics processing unit on the market, designed specifically for AI applications.
The H100 contains 80 billion transistors, which makes it capable of processing large amounts of data much faster than other GPUs, a special agent with the Commerce Department said in an affidavit included in the criminal complaint against Geng and Yang.
The H100 GPU can be used to train language models — AI models that can generate text, translate languages and answer questions in a human way — and to develop self-driving cars, medical diagnosis systems and other AI-powered applications.
Twenty days after the Biden administration imposed export restrictions on Nvidia’s and other sophisticated computer chips to China in 2022, Geng and Yang, together with a third, unidentified Chinese national, set up ALX Solutions Inc. in El Monte, California, which federal prosecutors claim they used to illegally ship the chips to China.
They are accused of sending the restricted products to purported end users in Malaysia and Singapore that were, in fact, freight forwarders who shipped the products to China. The California company, in return, received payments from businesses in China and Hong Kong, not from the middlemen they sent the chips.
In addition, Geng and Yang are accused of mislabeling the GPUs in their shipments as less valuable “computer parts” that aren’t subject to export restrictions and are less likely to be inspected by U.S. Customs and Border Protection.
At the same time, federal prosecutors claim, the two misrepresented to their U.S. suppliers of the restricted Nvidia products who the end users were. For one purchase of $28 million worth of computer gear that included 108 Nvidia GPUs that cost $208,000 each, they told the supplier the order was intended for a company in Singapore. That company didn’t exist at the address Geng and Yang provided.
The affidavit from the Commerce Department agent also cites a text exchange between Yang and the unidentified Chinese national who is the CEO of ALX Solutions.
The unidentified CEO instructs Yang to disassemble a so-called H200 server and ship it to Malaysia, where it will be forwarded to China.
“Pay attention to see if there is a tracker on it,” the CEO tells Yang. “You must look carefully. Fucking US Trump administration, who knows what they will do.”
The names of attorneys representing Geng and Yang weren’t available yet on the court’s website.
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