Computing

US Arrests Tech CEO Over $300M Nvidia Chip Smuggling Scheme

Federal prosecutors have arrested a California technology CEO for orchestrating a sprawling scheme to illegally divert over $300 million in export-controlled Nvidia AI hardware to China through front operations in Southeast Asia.

Radwan AbdulhadiEditor and technology writer

Published: October 3, 2026 · Updated: October 3, 2026 · 3 min read

US Arrests Tech CEO Over $300M Nvidia Chip Smuggling Scheme — Image: Ars Technica

Department of Justice Details Multi-Million Dollar Scheme

Federal law enforcement authorities have arrested a California technology CEO accused of orchestrating an elaborate multi-million-dollar operation to divert restricted high-end artificial intelligence hardware to China. According to an official Department of Justice <a href="https://www.justice.gov/opa/pr/california-man-arrested-smuggling-more-300-million-export-controlled-computer-servers-china">press release</a>, 38-year-old Greg Lui—also known as Yiu Kong Lui—utilized false paperwork and foreign freight-forwarding companies to mask shipments of advanced computer servers valued at more than $300 million.

Lui, who served as the chief executive officer of Earthmade Computer Inc., allegedly conspired with entities across South Asian nations including Malaysia and Singapore between October 2023 and August 2024. Prosecutors detailed the charges against the California executive in a formal federal <a href="https://cdn.arstechnica.net/wp-content/uploads/2026/10/US-v-Lui-Indictment-1-26.pdf">indictment</a>, outlining multiple counts of export control violations, outbound smuggling, and money laundering.

Routing Hardware Through Southeast Asia

Investigators allege that the illicit shipping network relied heavily on third-party jurisdictions where U.S. export restrictions do not directly apply. By funneling high-end servers containing Nvidia A100 and H100 graphics processing units through intermediaries in Malaysia and Singapore, the operation sought to disguise the final destination of the hardware.

Court documents highlight a 2024 transaction in which a purchase order for 27 servers totaling approximately $7,614,000 was placed with a U.S. manufacturer under the pretense of a Malaysian destination. Co-conspirators subsequently admitted to foreign officials that the entire batch was ultimately forwarded to recipients inside China, routing shipments straight into regional hubs such as Hangzhou.

Sophisticated Evasion Tactics and Fake Identities

To bypass regulatory checkpoints and fool federal officials, the operation deployed fabricated buyers and stolen corporate paperwork. FBI investigators noted that Lui purchased the identifying information of an individual years prior, utilizing those credentials to generate false purchase orders and dummy corporate entities like 'Jackie Lui' to mask transactions.

Financial trails uncovered through Bank of America and JP Morgan accounts revealed that Earthmade Computer collected more than $176 million during the course of the evasion scheme. Federal prosecutors are now moving to seize all funds acquired through the operation.

California tech CEO arrested, faces up to 20 years in prison for smuggling $300 million in Nvidia AI servers to China — Image related to the report from Tom's Hardware · Source: Tom's Hardware

Charges and Potential Penalties

Arraigned on October 1, Lui faces serious federal charges that carry substantial prison time. He is accused of one count of conspiracy to violate the Export Control Reform Act and the Export Administration Regulations, one count of outbound smuggling, and one count of conspiracy to commit money laundering.

Legal experts and prosecutors emphasize that convictions on the money laundering and conspiracy charges can each carry maximum sentences of up to 20 years in prison, while the smuggling charge carries a penalty of up to 10 years.

Broader Compliance Concerns Across the Tech Industry

The arrest underscores ongoing challenges regarding compliance and oversight within the global semiconductor supply chain. Government officials and investigative reports have repeatedly questioned how major manufacturers identify red flags when dealing with overseas intermediaries and startups requesting bulk computing shipments.

While chipmakers maintain that diversion rates represent a minor fraction of global distribution, federal agencies continue to ramp up enforcement efforts to block unauthorized high-performance accelerators from reaching foreign markets.

Sources

Ars TechnicaUS arrests tech CEO accused of smuggling $300M in Nvidia chips into China
Tom's HardwareCalifornia tech CEO arrested, faces up to 20 years in prison for smuggling $300 million in Nvidia AI servers to China