California Owner Charged in $300M Chip Smuggling Scheme
The U.S. Justice Department indicts Greg Lui for routing restricted Nvidia AI hardware to China through Southeast Asia.
Updated on Oct. 28, 2026 in Semiconductors
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On October 1, 2026, the U.S. Justice Department unsealed an indictment against California businessman Greg Lui for allegedly smuggling $300 million in restricted Nvidia AI hardware into China. The charges follow a multi-year scheme that routed high-performance chips through Malaysia and Singapore to bypass U.S. export controls.
Why it matters
This case highlights the ongoing challenges of enforcing U.S. export restrictions on high-performance semiconductors as illicit networks adapt to circumvent commerce licensing requirements. The scheme underscores the vulnerability of global transit hubs to hardware diversion, forcing tighter regulatory oversight in regions like Malaysia.
The smuggled hardware included Nvidia A100 and H100 GPUs, alongside GeForce RTX 4090 and 5090 units. These chips represent the current state-of-the-art for AI training workloads compared to legacy hardware.
The players
Greg Lui
The owner of Earthmade Computer Inc., a firm based in City of Industry, California, accused of orchestrating an illicit export network.
Nvidia
The semiconductor designer that produces the A100, H100, and RTX series GPUs now subject to strict U.S. export controls.
U.S. Justice Department
The federal agency overseeing the prosecution of export control violations and international smuggling operations.
The details
The scheme utilized a front where hardware was acquired from U.S. manufacturers by claiming approved overseas buyers as the final destination. The goods were then rerouted through intermediaries in Malaysia and Singapore, effectively bypassing U.S. Department of Commerce licenses required for export to China. This process relied on deceptive shipping manifests to mask the true destination of high-performance computing clusters.
Timeline
October 2023: Beginning of the alleged smuggling scheme.
January 2024: Purchase of 27 servers for $7.6 million.
June 5, 2026: Malaysian customs seized $12.9 million in server units.
July 2026: Malaysia mandated Strategic Trade Permits for AI chips.
October 1, 2026: Justice Department unsealed indictment against Greg Lui.
The Tech Race
The Export Control Reform Act remains a central legal instrument for regulators to track, though enforcement increasingly faces complex, multi-jurisdictional smuggling operations that challenge standard trade compliance. This indictment highlights a specific enforcement action taken to address the bypass of high-performance semiconductor restrictions.
Global supply chain managers and exporters should anticipate increased scrutiny and documentation requirements for high-performance computing hardware shipments. New regulations, such as Malaysia's July 2026 permit mandate, demonstrate the heightened compliance burden now standard for moving AI-capable silicon across international borders.
The takeaway
The illicit diversion of high-end GPUs confirms that export controls are increasingly triggering black-market demand for banned hardware. Readers should monitor the upcoming court proceedings for details on how investigators tracked the financial trails linking California firms to illegal Chinese recipients.
Further reading
Learn more about Semiconductors and the evolving landscape of global chip manufacturing and trade policy.
Source note: This article includes information reported by Startup Fortune.
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Do you trust that current export controls can effectively prevent the illegal smuggling of advanced AI chips?
