Nvidia chip smuggling case carries 50-year max

A California business owner was arrested on Thursday and charged with allegedly smuggling Nvidia hardware to China without the export licenses US law requires. Federal prosecutors say the scheme moved roughly $300 million worth of advanced AI equipment through freight businesses in the United States and transshipment companies in Malaysia.

The case lands amid a sustained US push to keep the most capable GPUs out of Chinese hands — a policy priority that now sits at the center of a criminal prosecution carrying a maximum sentence of 50 years.

Who Lui is and what he ran

Greg Lui, 38, allegedly used his company, Earthmade Computer Inc, to order products in the United States. Those orders consisted of servers containing high-powered Nvidia components, including A100, H100, PNY GE Force RTX 4090, and GeForce RTX 5090 GPUs — hardware typically used for artificial intelligence development.

Prosecutors say the equipment was then sent to Malaysia and Singapore, two countries that do not require licenses from the Commerce Department. Companies there would allegedly forward the hardware onward to China, a route the government describes as an effort to circumvent US export controls.

According to the government's account, Lui was fully aware of the legal implications of his alleged actions, and that US export laws restricted shipments of advanced Nvidia chips to China to license-holders.

The route through Malaysia and Singapore

The alleged scheme began in or around October 2023 and continued until at least August 12, 2026, according to court documents. Prosecutors claim Lui received more than $176 million in payments from two Malaysian transshipment companies.

In return, the government says, he introduced those companies to US-based suppliers capable of providing Nvidia hardware, brokering the sales of almost $300 million worth of equipment.

Court documents indicate the US obtained records tying the export of 92 servers to Kuala Lumpur from San Francisco International Airport, ordered by Earthmade. The same documents list the consignee for the onward re-shipment from Malaysia to Hong Kong as a Chinese customer.

The 'Jackie Lui' paperwork

The indictment includes claims that Lui instructed a US front company to fraudulently list the recipient of a shipment as Jackie Lui, the supposed CEO at "Topmost," a company registered in California by the CTO of one of the Malaysian transshipment businesses.

Prosecutors also allege that, in 2021, Lui illegally purchased identity documents that were used as part of the scheme. The charges paint a picture of layered obfuscation: US entities placing orders, foreign intermediaries receiving them, and paperwork designed to obscure who was actually buying.

The charges and the potential sentence

Lui is charged with one count each of violations related to the Export Control Reform Act and the Export Administration Regulations, outbound smuggling, and money laundering. Together, the counts carry a maximum prison sentence of 50 years.

The case is being handled as a national security matter rather than a routine customs dispute, a framing reflected in the seniority of the officials commenting on the arrest.

"SI is the defining technology of the era. The National Security Division will protect the American advantage in the chips that power this technology, a product of our unparalleled innovation and hard work, from illegal diversion by our economic and military adversaries."

— John A. Eisenberg, assistant attorney general for national security

The FBI's Counterintelligence and Espionage Division also weighed in on the investigation.

"The FBI's investigation revealed that Lui allegedly sold the Chinese government hundreds of millions of dollars' worth of American Super Intelligence technology, in clear violation of US export control laws. Controlling the export of advanced SI technology is critical to safeguarding our national security and defending the homeland, and the FBI will keep fighting for America's businesses and economic security. We're grateful to our partners across the US government and private sector for their assistance, and we'll continue holding accountable anyone who violates US export laws to enrich themselves and help our adversaries."

— Roman Rozhavsky, assistant director at the FBI's Counterintelligence and Espionage Division

What the US is trying to prevent

In plain terms, the US does not want its own tech companies' high-end hardware used to accelerate China's push for dominance in the race for the world's most capable AI. In current US official parlance, that goal is framed as "super intelligence," or SI.

The regulations Lui is accused of violating prohibit the sale of economically sensitive equipment to adversarial countries such as China in the interests of national security. Keeping the highest-end GPUs out of Chinese hands has been a stated priority for the US government.

The hardware named in the case spans several generations of Nvidia's lineup, from the A100 and H100 data-center accelerators to consumer-facing GeForce RTX 4090 and RTX 5090 cards — a mix that suggests demand for compute across both training and smaller-scale workloads.

Numbers at the center of the case

Several figures run through the charging documents, and they sketch the scale prosecutors are alleging:

• Around $300 million worth of Nvidia equipment allegedly intended for export
• More than $176 million in payments allegedly received from two Malaysian transshipment companies
• 92 servers tied to a Kuala Lumpur shipment from San Francisco International Airport
• Scheme alleged to run from around October 2023 until at least August 12, 2026
• Maximum prison sentence of 50 years across the charged counts
• Lui is 38 years old

The Register contacted Earthmade and Nvidia for comment.

Why the routing matters

The alleged path — order in the US, ship to Malaysia or Singapore, forward to China — exploits the fact that those two intermediary countries do not require Commerce Department licenses for the hardware in question. That structure is what prosecutors say turned a straightforward purchase into an export-control case.

Transshipment hubs have become a focal point for enforcement because they sit between licensed and unlicensed jurisdictions. The government's account of the "Topmost" paperwork and the "Jackie Lui" consignee entry suggests investigators are looking closely at how invoices and shipping labels were filled out, not just where the boxes physically went.

The mention of 2021 identity documents, meanwhile, points to alleged preparation that predates the scheme's start date by roughly two years.

How enforcement is being framed

The involvement of the National Security Division and the FBI's counterintelligence arm signals that the case is being treated as more than a licensing dispute. Both officials quoted in the announcement tied the alleged conduct directly to national security and economic competitiveness.

Eisenberg's statement frames the chips as a product of American innovation that must be protected from "illegal diversion." Rozhavsky's statement describes the alleged sales as going to the Chinese government and casts export control as central to defending the homeland.

The case also underscores that the hardware at issue is not obscure. A100, H100, RTX 4090, and RTX 5090 parts are widely recognized in the AI and gaming markets, which is precisely why their movement across borders draws scrutiny.

What this means for businesses and buyers

For companies that resell, freight, or configure high-end Nvidia hardware, the case is a reminder that export rules attach to destinations and end users, not just product categories. Intermediary countries that do not require licenses can still be part of a route that runs afoul of US law if the ultimate consignee is in a restricted destination.

Distributors and freight forwarders named in shipping documents may find themselves pulled into investigations even when they are not charged, given the government's focus on consignee records and front companies.

For AI firms and cloud providers, the practical effect could be continued pressure on supply chains and additional diligence around where accelerators end up. The alleged $300 million figure, if proven, illustrates how much money can flow through transshipment arrangements — and why prosecutors have made these cases a priority.

Lui is presumed innocent unless and until proven guilty. The charges are allegations, and the case will now move through the courts.