U.S. Justice Department Unmasks Smuggling Network for Nvidia Chips

Two individuals are in custody for allegedly smuggling Nvidia chips to China, circumventing U.S. export controls. The network involves straw purchasers and mislabeling practices. A key player admitted to smuggling activities exceeding $160 million. This case exposes threats to national security with illicit AI technology transfers.

The U.S. Justice Department has announced the arrest of two individuals implicated in a sophisticated smuggling operation involving Nvidia H100 and H200 chips, allegedly bound for China. This development comes after President Trump's recent decision to allow Nvidia exports to Beijing.

The accused, Fanyue Gong and Benlin Yuan, are believed to have conspired with logistics and AI technology firms to bypass export controls. They reportedly used straw purchasers and mislabeling tactics to disguise the true destination of the chips, which prosecutors allege were falsely declared for U.S. or third-country customers.

The operation, active since November 2023, funneled chips through U.S. warehouses, rebranded with fake company labels, and prepared for illegal export. With at least $160 million worth of chips involved, the scheme highlights national security risks posed by unauthorized technology transfers.

(With inputs from agencies.)