US Charges $300 Million Nvidia Chip Smuggling Scheme
US prosecutors have charged a California technology-company owner in an alleged scheme that sent more than $300 million of export-controlled computer servers to China through intermediary countries, with court records identifying Nvidia A100 and H100 GPUs among the equipment. Greg Lui, also identified as Yiu Kong Lui, was arrested on charges including conspiracy to violate US export controls, outbound smuggling and money laundering. The indictment alleges that Earthmade Computer and its associates represented Malaysia and Singapore as permissible destinations while intending to re-export systems to Chinese customers. The charges are allegations, and Lui is presumed innocent unless proved guilty. The case exposes another route through which restricted Nvidia accelerators can bypass formal market-access controls.
One transaction cited by prosecutors involved 27 servers purchased for about $7.6 million and shipped from Los Angeles to Kuala Lumpur. A co-conspirator later allegedly told a Malaysian official that all 27 had been forwarded to China. The Los Angeles Times identified the servers as containing Nvidia H100 processors and reported that A100 systems were also among the equipment involved in the broader alleged scheme. Prosecutors say Earthmade received more than $176 million from two Malaysia-based shipment companies during 2024. Those factual allegations have not yet been tested at trial, so the commercial volumes should be understood as the government’s case rather than established findings.
Nvidia is not accused of wrongdoing. Its exposure arises because export restrictions attach to some of its most capable products, while global demand creates incentives for diversion through distributors, shell companies and transshipment hubs. Manufacturers can screen customers and destinations, but they do not physically control a server after legitimate delivery into a third country. Each enforcement case therefore demonstrates the operational difficulty of translating country-level restrictions into product-level containment. For Nvidia, stronger compliance requirements can add documentation, shipment delays and customer checks even for legitimate buyers, while successful diversion can provoke tighter rules from US authorities.
The case also complicates Nvidia’s competitive position in China. Restricted accelerators reaching Chinese users through unauthorized channels may sustain familiarity with CUDA and Nvidia hardware, but they do not create a stable lawful market on which Nvidia can base forecasts, customer support or long-term platform strategy. Diversion can instead strengthen the political argument for broader controls, traceability requirements or restrictions on third-country sales. Nvidia has an interest in preserving legitimate access where regulations allow it while demonstrating that its distribution system does not become an easy route around controls intended to protect advanced US computing technology.
Analysis
The alleged $300 million scheme illustrates why export policy creates costs even when Nvidia itself complies: downstream diversion risk can make every third-country transaction subject to greater scrutiny. The company gains little strategic value from a grey-market installed base if those shipments trigger broader restrictions on legitimate sales. Enforcement therefore has an asymmetric effect—illegal demand can preserve short-term use of Nvidia technology in China while increasing the probability that Washington tightens the lawful channels Nvidia can actually monetize and support.