2 Chinese nationals charged for illegally smuggling AI chips

08/09/2025 / By Ramon Tomey

Two Chinese nationals – Chuan Geng (U.S. permanent resident) and Shiwei Yang (visa overstay) – were arrested in Southern California for orchestrating a scheme to smuggle advanced AI microchips from the U.S. to China in violation of export controls under the Export Control Reform Act (ECRA).
Their company, ALX Solutions Inc., allegedly funneled high-performance GPU chips (critical for AI systems) through Singapore and Malaysia to conceal their final destination (China), evading U.S. licensing requirements from October 2022 to July 2025.
Payments originated from Hong Kong and Chinese firms (including a $1 million transfer), contradicting claimed Southeast Asian buyers. Seized communications revealed discussions about using Malaysian middlemen to circumvent U.S. laws.
The case reflects the U.S.-China tech Cold War, with Washington tightening semiconductor export restrictions (since 2022) to curb China’s AI military ambitions, while China accelerates domestic production and exploits smuggling networks (e.g., Huawei’s 2023 breakthrough with a 7nm chip).
This prosecution is part of a pattern of U.S. crackdowns on export-control violations since 2021, underscoring the high-stakes battle over silicon supremacy and the strategic importance of AI and semiconductor dominance.

Two Chinese nationals have been arrested in Southern California for allegedly orchestrating a multi-million-dollar scheme to smuggle advanced microchips – critical to artificial intelligence (AI) systems – from the U.S. to China in violation of federal export controls.

Chuan Geng and Shiwei Yang, both 28 years of age, where charged Tuesday, Aug. 5, for violating the Export Control Reform Act (ECRA). Geng is a lawful U.S. permanent resident from Pasadena, while Yang – an El Monte resident – overstayed her visa.

Prosecutors say their company, ALX Solutions Inc., funneled “the most powerful GPU chips on the market” through Singapore and Malaysia to conceal their ultimate destination – China. Between October 2022 and July 2025, ALX Solutions allegedly shipped high-performance graphics processing units (GPUs) designed for AI-driven systems – including autonomous vehicles and medical diagnostics – without obtaining required licenses from the U.S. Department of Commerce.

The chips, though not named in court filings, are believed to be restricted models from U.S. firms like NVIDIA, whose advanced semiconductors are barred from export to China due to national security concerns. Moreover, authorities uncovered evidence suggesting deliberate evasion.

Payments for the chips came from Hong Kong and Chinese firms – including a $1 million transfer in January 2024 – rather than the purported Southeast Asian buyers. During a raid, investigators seized cellphones containing messages discussing the use of Malaysian middlemen to skirt U.S. laws, the U.S. Department of Justice (DOJ) said.

U.S., China vie for dominance in semiconductor industry

According to a DOJ press release posted on Aug. 5, Geng surrendered to authorities days earlier on Saturday, Aug. 2, while Yang was arrested earlier that day. The two could face up to 20 years in jail for violating the ECRA.

The case underscores the escalating technological Cold War between Washington and Beijing. Both nations vie for dominance in semiconductors, a linchpin of modern defense and civilian innovation.

The arrests highlight the Trump administration’s tightening chokehold on China’s access to cutting-edge tech. In October 2022, Washington imposed sweeping restrictions on semiconductor exports to stifle Beijing’s AI military ambitions.

China, in turn, has accelerated domestic chip production while allegedly enabling smuggling networks to bypass controls. This tactic was exemplified by Huawei’s surprise 2023 release of a smartphone with an indigenously produced seven-nanometer processor. (Related: China bets on Huawei’s Ascend chips to replace banned Nvidia technology.)

Geng was released on $250,000 bond, while Yang remains detained ahead of an Aug. 12 hearing. Both face arraignment Sept. 11.

The case reflects a broader pattern: Since 2021, U.S. authorities have prosecuted dozens of similar export-control violations, signaling zero tolerance for tech leaks to geopolitical rivals. As AI reshapes global power dynamics, the case serves as a stark reminder of the high-stakes battle over silicon supremacy and the lengths to which nations will go to secure it.

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