By GlobalDeskNews Staff | October 4, 2026
US Arrests California Man Over Alleged $300M AI Chip Smuggling to China
US authorities have arrested a California technology company owner accused of smuggling more than $300 million worth of export-controlled computer servers containing advanced AI chips to China, the Department of Justice announced on October 1, 2026.
The arrest
Greg Lui, 38, also known as "Yiu Kong Lui," of San Gabriel, California, was arrested on October 1 after being charged in a three-count federal indictment: conspiracy to violate US export controls, outbound smuggling, and conspiracy to commit money laundering.
Lui owns City of Industry-based Earthmade Computer Inc. Prosecutors allege that between 2023 and 2024, he and co-conspirators bought high-end servers containing US-manufactured Nvidia GPUs — including A100 and H100 chips — and shipped them to China without the required Commerce Department licences.
How the scheme worked
According to the indictment, Lui used false documents and complicated transshipment schemes to hide China as the true destination. Shipments were first sent to Malaysia and Singapore — countries where the same US export licences are not required — before being illegally re-exported to China.
Prosecutors say Lui knew the actual end users were in China while providing US manufacturers with documents showing permitted destinations. The Chinese purchaser is described as an industrial company based in Hangzhou, a major Chinese tech hub.
Why it matters
The servers contained GPUs used for what the Justice Department calls "super intelligence" applications — the Trump administration's term for advanced AI. Prosecutors said the technology could contribute to the military capabilities of other countries.
"Protecting America's national security means keeping our advanced super intelligence technology from being used to strengthen our adversaries' military capabilities," said federal prosecutor Bill Essayli. "We will aggressively prosecute those who put our national security at risk for profit."
John A. Eisenberg, assistant attorney general for national security, added: "These chips are the product of American ingenuity. The National Security Division will continue to enforce our export-control laws to protect that advantage."
Nvidia responds
"This case shows yet again that smuggling is a losing proposition — legally, economically and technically," Nvidia said in a statement. "Our work with law enforcement has led to prosecutions, and we will continue to engage with law enforcement."
What happens next
If convicted, Lui could face up to 50 years in prison. Prosecutors have argued he should be detained without bail, citing a "serious risk" he would flee if released.
The case is the latest in a series of federal prosecutions targeting the illegal diversion of advanced US chips to China. In March 2026, authorities charged a co-founder of Super Micro Computer with illegally diverting billions of dollars in Nvidia chips to China. He pleaded not guilty.
Sources
- SCMP – US man arrested over alleged $300 million Nvidia server smuggling to China (Oct 3, 2026)
- The Straits Times – Man charged in US with illegally shipping Nvidia AI chips to China (Oct 3, 2026)
- CNA – US arrests man over alleged smuggling of $300M computer servers to China (Oct 3, 2026)
- AFP via Economic Times – US arrests man over alleged smuggling (Oct 3, 2026)