Plots to send GPUs to China expose $160 million export-evasion web
NVIDIA AI Computing Card was seized on December 9, 2025 in Hangzhou, Zhejiang Province, China.
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U.S. officials announced Tuesday that they have shut down another China-linked smuggling network that was smuggling or attempting to traffic more than $160 million in export-controlled goods. Nvidia AI chips.
According to a Press release Two businessmen were detained by the U.S. Attorney’s Office, while a Houston-based company and its owner had already pleaded guilty to chip smuggling as part of a broader investigation.
The case comes as Washington steps up enforcement of export controls aimed at blocking China’s access to advanced artificial intelligence technologies, including Nvidia’s Graphics Processing Units.
According to the statement made by Nicholas J. Ganjei, US Attorney for the Southern District of Texas, the operation, called “Operation Gatekeeper”, revealed efforts to transfer cutting-edge artificial intelligence chips with military and civilian applications to organizations that could undermine US national security.
Newly unsealed documents show that Alan Hao Hsu, 43, of Missouri City, Texas, and his company, Hao Global LLC, pleaded guilty on Oct. 10 to smuggling and illegal export activities.
Hsu and his partners exported or attempted to export at least $160 million worth of Nvidia H100 and H200 GPUs between October 2024 and May 2025, authorities said.
The H200 and H100 models, while not Nvidia’s most advanced chips, still require a special license to be shipped to China under current controls.
Hsu’s operation allegedly forged shipping documents to misclassify GPUs and conceal their true destinations, including China, Hong Kong and other prohibited destinations. Investigators traced more than $50 million in funds from China to finance Hsu and Hao Global’s scheme.
Hsu, who is free on bail, faces up to 10 years in prison at his sentencing on Feb. 18, while Hao Global could face fines of up to twice his illicit earnings and probation.
In a statement shared with CNBC, an Nvidia spokesperson said export controls remain stringent and “even the sale of older generation products on the secondary market is subject to strict scrutiny and scrutiny.”
“With millions of controlled GPUs serving businesses, homes and schools, we will continue to work with the government and our customers to ensure second-hand trafficking does not occur,” the spokesperson said.
Relabeled Nvidia GPUs
U.S. authorities also charged Fanyue Gong, a 43-year-old Chinese citizen living in New York, and Benlin Yuan, a 58-year-old Canadian citizen living in Ontario, as part of the investigation.
Yuan serves as CEO of the US subsidiary of a Chinese IT company based in Beijing, while Gong owns a technology firm in New York. Both are alleged to have independently conspired with a Hong Kong logistics company and a China-based artificial intelligence firm to evade chip checks.
Prosecutors alleged that Gong used straw buyers and middlemen to purchase GPUs by misrepresenting that end customers were in the United States or unrestricted third countries.
Workers at U.S. warehouses would then rebrand the shipments under fake names and mislabel them as generic parts destined for export to China and Hong Kong, according to the lawsuit.
Yuan, meanwhile, is accused of recruiting investigators for the Hong Kong firm, instructing them to conceal their Chinese destination, fabricating stories to get detained shipments to be released, and providing false information to authorities. It is also claimed to handle storage for additional GPU exports.
If convicted, Yuan could face up to 20 years in prison for conspiracy to violate the Export Control Reform Act, while Gong could face up to 10 years in prison for smuggling conspiracy.
The investigation involved the Commerce Department’s Bureau of Industry and Security, which oversees and enforces U.S. export controls, including those on Nvidia. The case comes at a time of similar arrests Nvidia’s unauthorized exports have occurred in recent months.
Lawmakers are pushing to tighten oversight of US chip checks after reports of gaps in existing rules.
But the US President signaled this week that he would allow Nvidia to ship H200 chips to “approved customers” in China and elsewhere, as long as Washington takes a 25% cut of its profits.
While the H200 isn’t the cutting-edge product in Nvidia’s lineup, it will be the most advanced model available to China and could help meet demand for AI computing power in the country.
