An NVIDIA AI computing card photographed in Hangzhou, Zhejiang Province, China on December 9, 2025.
Photo | Future Publishing | Getty Images
U.S. authorities said Tuesday they have shut down yet another China-linked smuggling network that trafficked or attempted to traffic more than $160 million in export-controlled goods. Nvidia AI chip.
Two businessmen are in custody, and a Houston-based company and its management have already pleaded guilty to chip smuggling as part of a broader investigation, according to a press release from the U.S. Attorney’s Office.
The incident comes as the U.S. government ramps up enforcement of export controls aimed at restricting China’s access to advanced AI technology, including Nvidia’s graphics processing units.
The operation, dubbed Operation Gatekeeper, exposed an effort to funnel cutting-edge AI chips with military and civilian uses to organizations that could undermine U.S. national security, according to a statement from Nicholas J. Ganjay, the U.S. attorney for the Southern District of Texas.
Alan Hao Su, 43, of Missouri City, Texas, and his company, Hao Global LLC, pleaded guilty on October 10 to smuggling and illegal export activities, according to newly unsealed documents.
Officials said Hsu and his associates exported or attempted to export at least $160 million worth of Nvidia H100 and H200 GPUs between October 2024 and May 2025.
The H200 and H100 models aren’t Nvidia’s most advanced chips, but they require a special license to ship to China under current management.
Hsu’s operation allegedly involved misclassifying GPUs and falsifying shipping documents to hide their true destinations, including China, Hong Kong, and other prohibited locations. Investigators tracked more than $50 million in funds originating from China to fund Su and Hao Global’s scheme.
Su, who is free on bail, could be sentenced to up to 10 years in prison when sentenced on February 18, while Hao Global could be fined up to twice the amount of its ill-gotten gains and given a suspended sentence.
In a statement shared with CNBC, an NVIDIA spokesperson said export controls remain strict and “even the sale of older generation products in secondary markets is subject to intense scrutiny and review.”
“With millions of controlled GPUs in use in businesses, homes, and schools, we will continue to work with governments and customers to prevent second-hand smuggling,” the spokesperson said.
Nvidia GPU with relabeled
As part of the investigation, U.S. authorities also charged Fanyue Gong, 43, a Chinese citizen living in New York, and Benlin Yuan, 58, a Canadian citizen living in Ontario.
Mr. Yuan is CEO of the U.S. subsidiary of a Chinese IT company headquartered in Beijing, and Mr. Gong owns a New York technology company. They are accused of colluding independently with a Hong Kong logistics company and a China-based AI company to evade chip regulations.
Prosecutors argued that Gong obtained the GPUs by using straw purchasers and intermediaries to falsely pretend that the end customers were in the United States or in an unrestricted third country.
According to the case, employees at a U.S. warehouse rebranded shipments with fictitious names and falsely labeled them as generic parts for export to China and Hong Kong.
Meanwhile, Mr. Yuan is accused of hiring inspectors at Hong Kong companies, instructing them to hide their destinations in China, devising cover stories to release seized cargo, and providing false information to authorities. He is also credited with handling storage for additional GPU exports.
If convicted, Mr. Yuan could face up to 20 years in prison for conspiracy to violate the Export Control Reform Act, and Mr. Gong could face up to 10 years in prison for conspiracy to commit smuggling.
The investigation involved the Department of Commerce’s Bureau of Industry and Security, which oversees and enforces U.S. export controls involving Nvidia. The incident comes amid a series of similar busts of NVIDIA’s unauthorized exports in recent months.
Lawmakers are seeking to tighten oversight of U.S. chip regulations after reports of loopholes in existing rules.
However, the US president suggested this week that he would allow Nvidia to ship its H200 chips to “authorized customers” such as China, provided the US government gives a 25% tax break on profits.
Although the H200 is not the most advanced in Nvidia’s lineup, it will be the most advanced model available in China and could help meet the demand for AI computing power in China.
