Two Chinese nationals in California have been charged with smuggling millions of dollars’ worth of Nvidia Corporation (NASDAQ:NVDA) AI chips to China in violation of U.S. export controls, the Department of Justice announced Tuesday.

DOJ Uncovers Major AI Chip Smuggling Operation Involving Nvidia Hardware

According to the Justice Department, Chuan Geng and Shiwei Yang, both 28, were arrested and charged for exporting advanced AI chips, including Nvidia's H100 processors, to China without the required U.S. Commerce Department licenses, reported Reuters.

The alleged scheme, which spanned from October 2022 to July 2025, involved more than 20 shipments valued at tens of millions of dollars.

Geng, a permanent U.S. resident and Yang, who overstayed her visa, operated through their El Monte, California-based company, ALX Solutions. The company was founded shortly after the U.S. implemented export restrictions aimed at slowing China’s military AI development.

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Nvidia Chips Routed Through Southeast Asia To Evade Controls

Authorities say ALX Solutions purchased over 200 Nvidia H100 chips from Super Micro Computer in San Jose, falsely claiming customers were located in Singapore and Japan, the report noted.

One invoice listed a customer in Singapore with a declared value of $28.4 million, but U.S. officials in Singapore confirmed the entity did not exist at the listed address and that the shipment never arrived.

Nvidia And Super Micro Respond Amid Rising Export Control Scrutiny

A spokesperson for Nvidia said that "this case demonstrates that smuggling is a nonstarter," adding, "We primarily sell our products to well-known partners…who help us ensure that all sales comply with U.S. export control rules."

Nvidia added that diverted products do not receive support, service or updates, the report added.

Super Micro stated that it is "firmly committed to compliance with all U.S. export control regulations" and is cooperating with authorities.

Legal Proceedings And Background Context

Geng was released on a $250,000 bond, while Yang is scheduled for a detention hearing on Aug. 12. 

The case follows reports from earlier this year that estimated over $1 billion in Nvidia chips were smuggled to China via black-market networks.

As per the report, within three months of President Donald Trump tightening export controls, the highly sought-after B200 chip—used by major U.S. tech firms for AI—was being shipped and sold on China’s black market for American semiconductors.

Meanwhile, last month, Nvidia applied for U.S. government licenses to resume shipments of its H20 AI chips to China and expects approval soon.

At the time, White House adviser Kevin Hassett said the Trump administration’s decision to allow exports aims to prevent China from gaining a technological edge in advanced semiconductors.

Price Action: On Monday, Nvidia shares fell 0.97% during regular trading and dipped an additional 0.81% in after-hours, closing at $176.81, as per Benzinga Pro.

According to Benzinga’s Edge Stock Rankings, NVDA maintains strong momentum across short, medium and long-term periods. However, despite its robust growth, the stock’s value score remains relatively low. More in-depth performance details can be found here.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.