California man charged with smuggling $300 million in restricted AI hardware to China

Greg Lui is accused of procuring servers with Nvidia GPUs from U.S. manufacturers and sending them to China via Singapore and Malaysia.LOS ANGELES (CN) — A Southern California man was arrested Thursday on charges of smuggling $300 million worth of export-controlled computer hardware used in artificial intelligence applications to China without the required licenses.Greg Lui, 38, is charged with one count of conspiracy to violate the Export Control Reform Act, one count of outbound smuggling, and one count of conspiracy to commit money laundering, federal prosecutors in Los Angeles announced.“Protecting America’s national security means keeping our advanced Super Intelligence technology from being used to strengthen our adversaries’ military capabilities,” First Assistant United States Attorney Bill Essayli said in a statement, following President Donald Trump’s executive order from two days ago that requires federal agencies to use “super intelligence” rather than “artificial intelligence.”Lui operated Earthmade Computer Inc. in the City of Industry east of downtown Los Angeles. According to the prosecutors, he purchased high-end computer servers with Nvidia graphics processing units from U.S. manufacturers, falsely claiming they were meant for customers in countries for which the U.S. Commerce Department doesn’t require an export license to ship the hardware.From 2023 through 2024, Lui and his cronies sent the servers to Singapore and Malaysia, where he didn’t need a license, and then forwarded them to customers in China.The case docket in LA federal court didn’t yet list an attorney representing Lui.Many of Nvidia’s most advanced chips, which can cost tens of thousands of dollars and which form the backbone of AI programs developed by Microsoft and Meta among others, have been off limits to Chinese buyers, though some less advanced chips can be shipped to China with an export license.The huge demand for Nvidia’s chips in recent years has made the Santa Clara, California-based company the most valuable U.S. company by market capitalization.Some U.S. lawmakers want further restrictions on Nvidia sales to China to avoid that country gaining an edge over the U.S. in the “AI arms race,” given the potential military uses of AI and other national security concerns.“Preventing the illegal export of controlled technology is critical to protecting our national security,” Special Agent in Charge John Helsing of the Department of Defense Office of Inspector General said in the announcement. “These technologies provide core advantages to U.S. forces, and ensuring they remain safeguarded prevents adversaries from exploiting them."Last year, federal prosecutors in LA charged two Chinese nationals living in Southern California 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.The two were also accused of shipping the computer gear through Malaysia and Singapore to end users in China.Among the restricted Nvidia products they and Lui 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 a criminal complaint last year.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.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads