US Arrests Man Accused of Smuggling $300M in Nvidia AI Chips to China

US federal authorities have arrested a man identified as Greg Lui, charging him with smuggling servers containing $300 million worth of AI chips to China in violation of US export laws, according to Bloomberg.

The case has intensified criticism from government officials who say Nvidia has not done enough to prevent illegal shipments. Officials have pointed to anomalies such as unusually high chip shipments to Southeast Asian countries including Thailand and Singapore, which they say exceed local demand. Daniel Remler, former head of AI policy at the US State Department, questioned how so many chips could be destined for the region without serving customers in China.

Separately, reports have highlighted data center construction in western China that could house 115,000 restricted Nvidia processors, with US officials believing China may have already smuggled in that many chips or more.

The arrest follows earlier incidents, including a surveillance video showing someone using a red hair dryer to remove serial number stickers from Nvidia server boxes. In another case, Super Micro and its co-founder Yih-Shyan "Wally" Liaw were accused of using a Bangkok-based company to sell about $2.5 billion worth of AI servers to buyers in China, allegedly by attaching genuine labels to dummy servers to bypass compliance.

Nvidia has denied any wrongdoing, saying it has complied with US laws and has never been accused of abetting smuggling. The company said a startup's growth plan in a friendly nation is an opportunity, not a red flag. CEO Jensen Huang has previously lobbied US officials to relax export restrictions on AI chips to China. The case remains under investigation.