$300 Million AI Server Smuggling Operation in the US

US authorities have arrested a California technology company owner who allegedly attempted to deliver approximately $300 million worth of restricted Nvidia servers to China by breaching artificial intelligence export controls.

Details of the Operation

According to a statement by the US Department of Justice, 38-year-old Greg Lui (Yiu Kong Lui), a resident of San Gabriel, California, was arrested on Thursday. The suspect faces charges of conspiracy to violate export controls, foreign smuggling, and money laundering.

Misleading Documents and Shipment Routes

The indictment states that the defendant and his associates used forged documents to conceal that the actual destination was China, routing shipments through Malaysia and Singapore. It was emphasized that these complex transfer processes were used to bypass US export laws.

Restricted Hardware

At the center of the case are high-performance servers developed by US manufacturers containing Nvidia A100 and H100 graphics processing units. Prosecutors stated that this technology, used in superintelligence applications, could contribute to the military capabilities of other countries.

Financial Transactions and Company Connections

It was reported that hundreds of millions of dollars' worth of hardware was purchased through Earthmade Computer, a company owned by Lui, and that these license-required products were shipped via third countries. Between January and October 2024, more than $176 million was transferred from two Malaysia-based companies to Earthmade's account.

Legal Process and Potential Penalties

Nvidia officials stated that they are in full cooperation with law enforcement, emphasizing that smuggling is a losing path from legal, economic, and technical perspectives. If convicted, Greg Lui could face up to 20 years in prison for conspiracy, 20 years for money laundering, and 10 years for foreign smuggling.