US arrests Earthmade Computer CEO over alleged Nvidia chip smuggling

In short: US prosecutors say a California tech CEO illegally shipped more than $300 million worth of servers with restricted Nvidia chips into China.

What happened

The US Department of Justice said it arrested Greg Lui, the 38-year-old CEO of Earthmade Computer, on charges tied to smuggling computer servers into China. The servers allegedly contained Nvidia A100 and H100 chips, which are powerful parts used to run and train large AI systems (the software behind tools like chatbots).

According to prosecutors, Lui used false paperwork to make shipments look like they were going to places like Malaysia and Singapore, then rerouted them to China. The FBI says the scheme ran from October 2023 to August 2026, and that emails and bank records helped investigators trace the activity.

The Justice Department pointed to several examples. One involved an email about 70 servers that were said to be headed to Malaysia, even though a co-conspirator later told a Malaysian official that 27 of them had been shipped to China. Another shipment of 92 servers allegedly went through Singapore and Malaysia and then to Hong Kong, before ending up with a company in Hangzhou, which US investigators described as an AI hub in China.

Prosecutors also say Lui used a fake buyer and an identity he had purchased to make one 2024 shipment look legitimate. Lui faces charges including conspiracy to break export control rules, smuggling, and money laundering. If convicted, he could face up to 20 years in prison on some counts.

Why it matters

This case highlights how export controls can be sidestepped by routing goods through other countries (like relabeling a package so it looks like it is going to a different address). US officials worry these chips can help speed up advanced AI work and military capabilities in China.

Source: Arstechnica