US Busts China-Linked AI Chip Smuggling Ring Worth $50 Million

Washingtion - US authorities have dismantled a major China-linked smuggling network that secretly exported advanced Nvidia artificial intelligence processors out of the country. More than $50 million worth of GPUs and cash has been seized, and multiple individuals have been arrested for alleged violations of US export-control laws.

The Justice Department, announcing the results of *Operation Gatekeeper*, said the network illegally funnelled high-end AI chips to China, Hong Kong, and other restricted destinations by falsifying documents, mislabeling shipments, and routing payments through wire transfers from China.

“The United States leads the world in innovation, including the advanced computer chips that power modern AI,” said Assistant Attorney General for National Security John A. Eisenberg. “This technological edge is not accidental — it is the result of years of hard work and sacrifice by American engineers and scientists.”

US Attorney Nicholas J. Ganjei of the Southern District of Texas said the probe uncovered “a sophisticated smuggling network that threatens our national security by funnelling cutting-edge AI technology to adversaries.” He added, “These chips form the backbone of AI superiority and play a critical role in modern military systems.”

The FBI said the smuggling operation depended on intricate procurement chains and deliberate deception.

“Gong and his accomplices allegedly ran a complex scheme to smuggle high-performance GPUs to China in violation of US export laws,” said Roman Rozhavsky, Assistant Director of the FBI’s Counterintelligence Division.

According to newly 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 say that from October 2024 to 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 chips.

Hsu and his partners allegedly falsified documents and hid the real destinations of the shipments. Hao Global reportedly received over $50 million in wire transfers originating from China to fund the operation. Hsu faces up to 10 years in prison at his sentencing on February 18.

Two more suspects have been taken into custody. Benlin Yuan, 58, CEO of a Virginia-based IT firm linked to a Beijing parent company, 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 national living in Brooklyn, was arrested and accused of conspiring to smuggle restricted goods.

Prosecutors say Gong used straw buyers and rebranded Nvidia GPUs under the fake name “SANDKYAN”, while Yuan allegedly managed inspectors and coordinated false statements to US authorities.

The crackdown comes as the US tightens restrictions on exporting advanced AI processors, fearing they could bolster China’s military and cyber capabilities.

—With inputs from IANS