A California man is facing federal charges for helping smuggle over $300 million worth of Nvidia semiconductor chips into China, prosecutors said this week.
Yiu Kong Lui, 38, of San Gabriel, Cali., was arrested on Thursday and is set to be arraigned in federal court and charged with violating export controls, smuggling, and money laundering, court records show.
It is illegal to export advanced semiconductor chips into China without a license, as the US competes with the East Asian giant in the AI race.
President Donald Trump drew criticism last year for allowing Nvidia to sell its chips to China, a departure from the previous US policy under President Joe Biden, which effectively blocked all exports of advanced chips to China.
Nvidia’s chips are especially sought after for use in AI data centers because they can perform multiple calculations simultaneously, and because the company’s software stack is widely compatible.
In a press release, US officials said Liu put US national security at risk by smuggling the chips.
“Controlling the export of advanced SI technology is critical to safeguarding our national security and defending the homeland, and the FBI will keep fighting for America’s businesses and economic security,” said Roman Rozhavsky, an assistant director of the FBI’s counterintelligence and espionage division.
It was not immediately clear on Friday whether Liu was being represented by an attorney. According to court records, Lui has not yet pleaded guilty or not guilty to the charges.
In a 22-page indictment, prosecutors said Liu worked with several co-conspirators who operated shell companies to first get the chips to either Malaysia or Singapore, and then into China.
Prosecutors said a company owned by Liu served as a go-between for foreign shipping companies and US chip manufacturers, and that Liu lied to US companies, claiming the chips wouldn’t end up in China.
The operation began in 2023 and continued until August, according to the indictment. Liu’s company was paid over $180 million by Malaysian shipping companies to broker the chip deals, prosecutors said.
If convicted of all charges, Liu could serve a combined 50 years in prison.
“This case shows yet again that smuggling is a losing proposition — legally, economically and technically,” an Nvidia spokesperson said in a statement. “Our work with law enforcement has led to prosecutions, and we will continue to engage with law enforcement.”
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