Federal agents have arrested a California businessman accused of turning his small server company into a pipeline that funneled more than $300 million in Nvidia AI hardware to China. It is the largest alleged chip-smuggling case the Justice Department has brought in its three-year fight to keep advanced American GPUs out of Chinese hands.

Greg Lui, 38, also known as Yiu Kong Lui, was taken into custody on Thursday, Oct. 1. He owns Earthmade Computer Inc., a privately held server reseller based in City of Industry, California. The indictment charges him with conspiracy to violate US export controls, outbound smuggling, and conspiracy to commit money laundering. A conviction on all counts carries a maximum of 50 years in prison.

Prosecutors asked a judge to keep him locked up until trial, arguing in a court filing that he poses a “serious risk” of flight.

How the Nvidia chip smuggling route ran through Malaysia and Singapore

The scheme, as prosecutors describe it, was built on a paperwork trick. Lui and unnamed co-conspirators bought export-controlled servers loaded with Nvidia A100 and H100 GPUs, the chips at the center of Washington’s AI export bans, from US manufacturers. They then filed documents claiming the equipment was headed to Malaysia or Singapore, two countries where US licenses aren’t required for those purchases. From there, the hardware was quietly re-routed to Chinese buyers, according to prosecutors.

One purchase order cited in the case lays out the mechanics: 27 servers packed with Nvidia H100 chips, worth about $7.6 million under a single order, shipped from Los Angeles County to Kuala Lumpur in January 2024. A Malaysian co-conspirator later told a government official the shipment had already been transshipped on to a Chinese customer. Another filing describes Earthmade receiving more than $176 million between January and October 2024 from two Malaysia-based shipping companies tied to the scheme, payments the Justice Department says pushed the total value of diverted hardware past $300 million.

The scheme allegedly ran from 2023 to 2024, according to federal prosecutors. The Chinese purchaser is described in the indictment as an industrial company based in Hangzhou, a major Chinese tech hub.

“We will aggressively prosecute”

“This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China,” said first assistant US attorney Bill Essayli in Los Angeles. “We will aggressively prosecute those who put our national security at risk for profit.”

Assistant attorney general for national security John A. Eisenberg was blunter about what was at stake. “These chips are the product of American ingenuity,” Eisenberg said. “The National Security Division will continue to enforce our export-control laws to protect that advantage.”

The Justice Department says the servers contained chips used in what prosecutors call “super intelligence” applications, technology it argues could contribute to the military capabilities of other countries.

Nvidia, for its part, says it helped build the case. “This case shows yet again that smuggling is a losing proposition — legally, economically and technically,” the company said in a statement. “Our work with law enforcement has led to prosecutions, and we will continue to engage with law enforcement.”

That’s the company telling its own supply chain to watch itself.

A pattern, not a one-off

Lui’s arrest is the latest in a string of federal prosecutions aimed at keeping advanced US-made chips out of Chinese hands. In March, authorities charged a co-founder of Super Micro Computer with illegally diverting billions of dollars in Nvidia chips to China. He pleaded not guilty.

The controls themselves keep tightening. Washington first restricted advanced AI chip exports to China in October 2022, then closed licensing loopholes in April 2025. The alleged Lui scheme, with its Malaysia-and-Singapore detour, reads like a case study in exactly the kind of transshipment those rules were written to stop.

It also lands at an awkward moment for the industry. Independent research recently flagged that billions of dollars in advanced Nvidia chips may still be reaching Chinese buyers through intermediaries despite the tightened controls, a claim Nvidia has pushed back on. Prosecutions like this one are the government’s answer: the rules mean something, and the money trail is traceable.

Why this case matters

The dollar figure is what makes this arrest different. Previous chip-smuggling cases were measured in the millions. $300 million is a different order of magnitude, and it suggests the transshipment networks feeding China are more industrialized than Washington has publicly acknowledged.

It also raises an uncomfortable question for every server reseller in the US: how many more Earthmades are out there? The Justice Department needed roughly two years and more than $176 million in wire transfers to build this one. Smuggling on this scale leaves a financial footprint, but only if someone is looking.

For Nvidia, the case is both validation and a headache. Cooperation with law enforcement lets the company show it isn’t a bystander. But every prosecution also undercuts its argument that the China exposure in its sales channel is under control. Expect that tension to come up on the next earnings call.

FAQ

What is Greg Lui accused of doing?

Federal prosecutors allege Lui used his company, Earthmade Computer Inc., to buy export-controlled servers with Nvidia A100 and H100 GPUs from US manufacturers, ship them to Malaysia and Singapore on false paperwork, and re-export them to buyers in China. The scheme allegedly moved more than $300 million worth of hardware between 2023 and 2024.

How did the alleged Nvidia chip smuggling scheme work?

Prosecutors say Lui filed paperwork claiming the servers were headed to Malaysia or Singapore, which don’t require US export licenses for advanced AI chips, then quietly re-routed them to China. One cited order covered 27 servers packed with Nvidia H100 chips worth about $7.6 million shipped from Los Angeles County to Kuala Lumpur in January 2024.

What charges does Greg Lui face?

Lui, 38, faces one count each of conspiracy to violate US export controls, outbound smuggling, and conspiracy to commit money laundering. If convicted on all counts, he could face up to 50 years in prison. Prosecutors asked that he be detained without bail over what they called a serious flight risk.

What did Nvidia say about the smuggling case?

Nvidia said it worked with law enforcement on the case and stated: “This case shows yet again that smuggling is a losing proposition — legally, economically and technically.” The company said its cooperation with law enforcement “has led to prosecutions.”

Sources: Bloomberg, South China Morning Post, Startup Fortune