U.S. federal authorities have detained two men suspected of orchestrating a sophisticated smuggling operation that funneled high-end Nvidia AI chips to China in defiance of export restrictions. The alleged scheme involved falsified paperwork, shell companies, and mislabeling of restricted hardware — part of what prosecutors describe as a significant national-security threat.
Smuggling Ring Targeting H100 and H200 Chips Uncovered
According to court documents, the accused—Fanyue Gong and Benlin Yuan — worked with a network of intermediaries, straw purchasers, and a Hong Kong-based logistics firm to obtain Nvidia’s H100 and H200 GPUs. Prosecutors say the chips were initially sent to U.S. warehouses, where labels were removed and replaced with those of a purportedly fake company to disguise the true destination before they were shipped abroad.
Authorities estimate the illicit operation has been active since at least November 2023, moving or attempting to move a reported US$160 million worth of advanced AI chips.
Historic Export Crackdown Amid Evolving Trade Policy
The arrests coincide with a recent change in U.S. policy allowing controlled exports of Nvidia’s H200 chips to China — a move officially cleared for approved buyers under strict oversight.
Still, officials say that the smuggling scheme demonstrates how black-market networks continue to exploit loopholes, endangering American national-security interests by diverting sensitive AI hardware to restricted foreign entities.
