Two Arrested For Smuggling Ai Chips To China; Nvidia Says No To Kill Switches

The U.S. Department of Justice (DOJ) said connected Tuesday that 2 Chinese nationals person been arrested for their alleged engagement successful illegally shipping “tens of millions of dollars” worthy of high-performance AI chips to China.

The DOJ said Chuan Geng and Shiwei nan were arrested successful California connected August 2 and charged pinch violating nan Export Control Reform Act, a felony that carries a statutory punishment of a maximum of 20 years successful prison.

Geng and nan are accused of knowing and willfully shipping “sensitive technologies,” including GPUs, to China from nan U.S. done their California-based company, ALX Solutions.

The DoJ did not sanction nan institution whose chips ALX Solutions was allegedly smuggling, but quoting a complaint, it said nan spot is “the astir powerful spot successful nan market” and is “designed specifically for AI applications.” That explanation makes it apt that nan chips being smuggled were made by Nvidia. A report by Reuters specifically named Nvidia’s H100 GPUs arsenic nan chips being shipped.

A reappraisal of export documents by nan DOJ recovered that ALX Solutions sent chips and different tech to shipping and freight-forwarding companies successful Singapore and Malaysia, but received payments from entities successful Hong Kong and China successful return. The section besides recovered records of connection regarding shipping nan tech to Malaysia to specifically spell astir U.S. export restrictions.

“This lawsuit demonstrates that smuggling is simply a nonstarter,” an Nvidia spokesperson said successful a statement. “We chiefly waste our products to well-known partners, including OEMs, who thief america guarantee that each income comply pinch U.S. export power rules. Even comparatively mini exporters and shipments are taxable to thorough reappraisal and scrutiny, and immoderate diverted products would person nary service, support, aliases updates.”

The news comes arsenic nan U.S. tries to fig retired really to onslaught a equilibrium betwixt fostering world AI invention and imposing export restrictions to China, which galore successful nan West comprehend to beryllium a awesome threat successful nan AI race. The Trump administration’s recently-announced AI Action Plan belabored nan value of having beardown export restrictions, but was ray connected details.

One imaginable solution to curb spot smuggling that has been suggested by nan U.S. authorities successful caller days is to implement search exertion into chips to thief drawback smuggling, but chipmakers are rather opposed to specified a move.

In a blog station connected Tuesday, Nvidia said its GPUs do not see termination switches aliases backdoors, and based on that building successful specified devices would only consequence successful compromising security.

“Nvidia has been designing processors for complete 30 years. Embedding backdoors and termination switches into chips would beryllium a gift to hackers and dispute actors,” nan institution wrote. “It would undermine world integer infrastructure and fracture spot successful U.S. technology. Established rule wisely requires companies to hole vulnerabilities — not create them.”

“That’s not sound policy. It’s an overreaction that would irreparably harm America’s economical and nationalist information interests,” Nvidia wrote.

Nvidia did not instantly return requests for further comment.

For much connected nan semiconductor industry’s tumultuous twelvemonth truthful far, here’s a regularly updated timeline of marketplace news since nan opening of 2025.