The Department of Justice announced that two Chinese men have been arrested and charged with smuggling NVIDIA chips to China.

Following the unsealing of court documents, the Justice Department stated on the 8th that Haochun Hsu, 43, of Missouri City, and his company, Hao Global LLC, pleaded guilty to smuggling and illegal export activities on October 10th.

According to court documents, between October 2024 and May 2025, Hsu and others exported or attempted to export at least $160 million worth of NVIDIA H100 and H200 Tensor Core GPUs, which are subject to export controls.

These high-speed GPUs are NVIDIA graphics processors equipped with specialized hardware devices (Tensor Cores) designed to accelerate the matrix mathematics essential for deep learning, AI training, inference, and high-performance computing (HPC). They perform mixed-precision calculations much faster than standard CUDA cores and their export to China is prohibited.

Hsu and his associates falsified shipping documents, misrepresenting the nature of the products and their recipients to conceal their final destination. He and Hao Global LLC received over $50 million in funds wired from China to finance this scheme. The GPUs were ultimately shipped to China, Hong Kong, and other regions in violation of U.S. export laws.

Additionally, two Chinese nationals, Fanyue Gong, 43, a resident of New York City, and Benlin Yuan, 58, a Canadian national residing in Mississauga, Ontario, were indicted and arrested by law enforcement officials on December 3rd in New York City and November 28th in Sterling, Virginia, respectively.

Yuan is the CEO of the U.S. subsidiary of a large Chinese IT company headquartered in Beijing, and Gong is the owner of a technology company based in New York.

The indictment states that Gong and Yuan independently conspired with employees of a Hong Kong-based logistics company and a China-based AI technology company to circumvent U.S. export controls.

According to the criminal complaint, Gong's co-conspirators obtained the NVIDIA GPUs through straw buyers and intermediaries, falsely representing that the chips were intended for U.S. customers or customers in countries that do not require an export license.

The indictment alleges that the chips were shipped to various warehouses within the United States, where individuals working for Gong relabeled the GPUs with a fake company name, "SANDKYAN," after removing NVIDIA labels, and prepared them for export.

Shipping and export documents for the GPUs reportedly misclassified the chips as general computer components. Accomplices are also accused of transporting or attempting to transport the chips to China and Hong Kong in violation of U.S. laws.

The indictment states that Yuan is accused of helping recruit and organize personnel to inspect mislabeled GPUs on behalf of the Hong Kong logistics company. He reportedly agreed to instruct inspectors not to mention that the goods were destined for China.

The indictment alleges that Yuan engaged in multiple conversations regarding providing false information to U.S. authorities about the chips' end purchasers.

Yuan is also accused of directly participating in and agreeing to handle and store another shipment of NVIDIA GPUs on behalf of the Hong Kong logistics company.

Hsu is scheduled for sentencing on February 18th and faces a maximum sentence of 10 years in federal prison. Hao Global LLC faces potential fines up to twice the gross profits gained from the criminal activity and probation.

Yuan faces a maximum sentence of 20 years if convicted of conspiracy to violate the Export Control Reform Act, and Gong faces up to 10 years in prison for conspiracy to smuggle goods from the United States.

Hsu remains on bond pending sentencing, while Yuan and Gong are in custody awaiting further criminal proceedings.

U.S. Attorney for the Southern District of Texas, Nicholas J. Ganjei, stated in a press release, "Operation Gatekeeper uncovered a sophisticated smuggling network that threatened national security by leaking cutting-edge artificial intelligence technology to those who would act against U.S. interests."

"These chips are a critical component of the artificial intelligence advantage and essential for modern military applications. The nation that controls these chips will control artificial intelligence technology, and the nation that controls artificial intelligence technology will control the future. The U.S. Attorney's Office for the Southern District of Texas will vigorously prosecute any attempt to undermine America's technological superiority," Ganjei said.

A spokesperson for the Chinese Embassy in Washington D.C. told the news agency, "The Chinese government requires Chinese nationals overseas to strictly abide by local laws and regulations, while also legally protecting the legitimate rights and interests of Chinese nationals overseas."

An NVIDIA spokesperson told Reuters, "While millions of controlled GPUs are in use by businesses, homes, and schools, we continue to work with governments and our customers to prevent illicit resale and smuggling," adding that for sales of older products on the secondary market, "we apply strict security and review procedures."

NNP = Reporter Sung Ku Hong / Special Contribution NNP info@newsandpost.com