Two Arrested for Smuggling AI Chips to China as Nvidia Dismisses Kill Switches

On Tuesday, the U.S. Department of Justice (DOJ) reported the arrest of two Chinese individuals for their alleged involvement in the unlawful export of high-performance AI chips valued at tens of millions of dollars to China.

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

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

Although the DOJ did not name the specific company whose chips ALX Solutions allegedly trafficked, it referenced a complaint characterizing the chip as “the most powerful chip on the market,” specifically designed for AI applications. This strongly indicates that the chips in question are from Nvidia, with reports from Reuters suggesting that Nvidia’s H100 GPUs were involved.

An investigation by the DOJ uncovered that ALX Solutions sent chips and other technologies to freight and shipping companies in Singapore and Malaysia, receiving payments from entities in Hong Kong and China. Furthermore, records of communication revealed plans to ship the technology to Malaysia as a means to bypass U.S. export restrictions.

“Nvidia views this case as a clear warning that smuggling activities will not be tolerated,” stated a Nvidia spokesperson. “Our primary partners are reputable, including OEMs, who assist us in adhering to U.S. export control regulations. All exporters, regardless of size, face strict scrutiny, and any diverted products receive no service, support, or updates.”

This development occurs as the U.S. seeks to strike a balance between promoting global AI innovation and imposing export restrictions to China, regarded by many in the West as a formidable competitor in the AI space. The AI Action Plan recently unveiled by the Trump administration underscored the need for stringent export restrictions, albeit lacking in specific details.

One recommendation from the U.S. government to tackle chip smuggling is the implementation of tracking technology within chips, a proposal that has met with strong resistance from chip manufacturers.

In a blog post on Tuesday, Nvidia asserted that its GPUs do not contain kill switches or backdoors, asserting that the addition of such features would endanger security.

“With over 30 years of experience in processor design, embedding backdoors and kill switches into chips would only serve to benefit hackers and adversarial entities,” Nvidia remarked. “Such actions would jeopardize global digital infrastructure and erode trust in U.S. technology. Existing regulations rightly compel companies to mitigate vulnerabilities rather than create them.”

“This approach is unwise. It represents an overreaction that could severely harm America’s economic and national security interests,” Nvidia warned.

Nvidia has not yet responded to requests for additional comments.

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