Two Arrested for Smuggling AI Chips to China as Nvidia Denies Kill Switch Allegations

On Tuesday, the U.S. Department of Justice (DOJ) announced the apprehension of two individuals from China for allegedly engaging in the illegal export of high-performance AI chips valued at millions to China.

Chuan Geng and Shiwei Yang were arrested in California on August 2 and are currently facing charges under the Export Control Reform Act, a federal offense that could lead to a maximum prison sentence of 20 years.

The two are accused of intentionally exporting “sensitive technologies,” including GPUs, from the U.S. to China through their California-based company, ALX Solutions.

Although the DOJ did not specify the chip manufacturer linked to ALX Solutions’ alleged trafficking, court documents referred to the chip as “the most powerful chip on the market,” purportedly designed for AI applications. This strongly indicates the potential involvement of Nvidia’s chips, with reports from Reuters suggesting that Nvidia’s H100 GPUs were part of the operation.

The DOJ’s investigation found that ALX Solutions sent chips and related technologies to freight firms in Singapore and Malaysia, receiving payments from entities in Hong Kong and China. Communications indicated plans to transport the technology through Malaysia to bypass U.S. export regulations.

“Nvidia sees this case as a clear indication that smuggling activities will not be accepted,” stated a representative from Nvidia. “Our primary partners are reputable, including OEMs, who assist us in complying with U.S. export control laws. All exporters, regardless of size, are subjected to rigorous scrutiny, and any divested products receive no support, service, or updates.”

This incident highlights the U.S. aim to balance promoting global AI innovation with enforcing export restrictions to China, which many in the West view as a significant competitor in the AI space. The AI Action Plan initiated by the Trump administration stressed the need for strict export controls, though it lacked detailed specifications.

One proposal from the U.S. government to tackle chip smuggling includes integrating tracking technology into chips, a suggestion that has met significant opposition from chip manufacturers.

In a blog post released on Tuesday, Nvidia asserted that its GPUs do not include kill switches or backdoors, contending that such features would undermine security.

“With over 30 years in processor design, embedding backdoors and kill switches into chips would primarily benefit hackers and hostile actors,” claimed Nvidia. “Such measures would jeopardize global digital infrastructure and diminish trust in U.S. technology. Current regulations appropriately require companies to address vulnerabilities rather than introduce new ones.”

“This method is misdirected. It represents an overreaction that could seriously threaten America’s economic and national security interests,” Nvidia warned.

Nvidia has not provided further comments in response to inquiries.

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