US busts China-linked AI chip smuggling ring worth $50 million
Washington, Dec 9 (IANS/WISHAVWARTA) US authorities have dismantled what they described as a major China-linked smuggling operation that covertly moved advanced Nvidia artificial intelligence processors out of the country, seizing more than $50 million in GPUs and cash and arresting multiple individuals accused of violating export-control laws.
Announcing the results of ‘Operation Gatekeeper’, the Justice Department said the network funnelled top-end AI chips to China, Hong Kong, and other restricted destinations by falsifying paperwork, mislabeling shipping documents, and routing payments through wire transfers originating in the People’s Republic of China.
“The United States has long emphasised the importance of innovation and is responsible for an incredible amount of cutting-edge technology, such as the advanced computer chips that make modern AI possible,” said Assistant Attorney General for National Security John A. Eisenberg. “This advantage isn’t free but rather the result of our engineers’ and scientists’ hard work and sacrifice.”
US Attorney Nicholas J. Ganjei for the Southern District of Texas said the investigation exposed “a sophisticated smuggling network that threatens our Nation’s security by funnelling cutting-edge AI technology to those who would use it against American interests”. He added, “These chips are the building blocks of AI superiority and are integral to modern military applications.”
The FBI said the scheme relied on complex procurement channels and deliberate deception to move restricted goods.
“Gong and his accomplices allegedly led a complex scheme to smuggle high-performance graphic processing units to China in violation of US export laws,” said Roman Rozhavsky, Assistant Director of the FBI’s Counterintelligence Division.
According to unsealed court documents, Alan Hao Hsu, 43, of Missouri City, Texas, and his company, Hao Global LLC, pleaded guilty on October 10 to smuggling and unlawful export activities. Prosecutors said that between October 2024 and May 2025, Hsu and others exported or attempted to export at least $160 million worth of Nvidia H100 and H200 Tensor Core GPUs, among the world’s most advanced AI processors.
Hsu and his associates allegedly falsified shipping paperwork and concealed the true destination of the chips. Hao Global received more than $50 million in China-originated wire transfers to fund the scheme. Hsu faces up to 10 years in prison at his February 18 sentencing.
Two others are now in custody. Benlin Yuan, 58, CEO of a Sterling, Virginia IT subsidiary of a Beijing-based firm, was arrested on November 28 and charged with conspiring to violate the Export Control Reform Act of 2018. On December 3, Fanyue ‘Tom’ Gong, 43, a Chinese citizen living in Brooklyn, was arrested and charged with conspiring to smuggle goods out of the United States.
Charging documents allege Gong used straw purchasers and relabeled Nvidia GPUs under the fake brand ‘SANDKYAN’, while Yuan allegedly coordinated inspectors and discussed giving false information to authorities.
The enforcement push comes amid tightened US export restrictions on advanced AI chips over concerns they could accelerate China’s military modernisation and cyber capabilities.
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