Hardware Ready Ready to Bench?
chip smuggling arrest. The US Department of Justice announced on October 1 the arrest of Greg Lui, a 38-year-old resident of San Gabriel and owner of Earthmade Computer, an IT company based in City of Industry, California. According to an indictment filed by a federal grand jury on September 29, the entrepreneur allegedly illegally exported servers worth over $300 million containing Nvidia accelerators subject to export controls to China without obtaining the necessary licenses from the Department of Commerce.
Lui is charged with conspiracy to violate the Export Control Reform Act, smuggling, and conspiracy to launder money. The charges carry a maximum sentence of 20 years in prison for each count of conspiracy and 10 years for smuggling.
chip smuggling arrest: why it matters
The fraudulent scheme allegedly began in October 2023 and continued at least until August 2026. The defendant reportedly used triangulation through third countries, with false documentation indicating legal recipients and final destinations. The hardware was shipped to Malaysia and Singapore, where licenses are not required, before being re-exported to China.
Investigators claim that among the buyers were entities linked to the Beijing government. Investigations conducted by the FBI, the Department of Commerce, and the Defense Criminal Investigative Service revealed repeated operations: in January 2024, Lui allegedly purchased 27 servers for approximately $7.6 million, declaring them destined for Malaysia, while a co-conspirator informed a Malaysian official that the cargo had ended up in China. The following June, 92 servers reportedly departed from San Francisco for Kuala Lumpur, passing through Hong Kong before arriving at a company in Hangzhou.
Another lot of 100 units with H100 chips, valued at over $22 million, was sold to a fictitious buyer. Earthmade reportedly collected more than $176 million from two Malaysian companies between January and October 2024.
“This defendant allegedly used false documents and shipments through third countries to smuggle over $300 million in controlled servers,” stated Bill Essayli, First Assistant United States Attorney for the Central District of California. Nvidia, which is cooperating with authorities, commented that “smuggling is a losing proposition: legally, economically, and technically.”
What changes and what are the effects
The case fits into a context of restrictions imposed by Washington starting in 2022, when sales of data center accelerators to Beijing were limited, prompting Nvidia to create downgraded versions for that market. In recent months, similar proceedings have increased, such as the case involving nine people in Taiwan and the $2.5 billion case concerning a Super Micro co-founder.
The prosecution has requested bail denial for Lui, citing flight risk. The trial will determine the validity of the charges, but it is foreseeable that pressure on the Southeast Asian logistics chain will increase further.
Source and further reading on chip smuggling arrest: original article.
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