Federal agents arrested a Southern California computer seller Thursday on charges that he smuggled more than $300 million of export-controlled servers built around U.S. graphics processors to China, the Justice Department said. Prosecutors allege he shipped the machines to Malaysia and Singapore, where no export license was needed, and had them forwarded to Chinese buyers.

What Happened

The defendant, Greg Lui, 38, of San Gabriel, California, also known as Yiu Kong Lui, runs Earthmade Computer Inc., a technology company in the City of Industry east of Los Angeles. He is charged with conspiracy to violate the Export Control Reform Act and the Export Administration Regulations, outbound smuggling and conspiracy to commit money laundering.

The export and money laundering conspiracy counts each carry a maximum of 20 years in prison, and the smuggling count carries up to 10 years. Lui was scheduled to make his initial court appearance Thursday afternoon. The charges are allegations, and he is presumed innocent unless proven guilty.

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According to prosecutors in the Central District of California, Lui bought high-end servers containing U.S.-made GPUs in 2023 and 2024 without obtaining the Commerce Department licenses required to send them to China. The Justice Department release does not name the chipmaker, but Courthouse News reported that the servers used Nvidia graphics processors. The government says false paperwork described the equipment as bound for customers in countries that do not require a license.

From January to October 2024, Earthmade received $176 million from transshipment companies in Malaysia, the Justice Department said. In one example, Lui submitted a purchase order in January 2024 to a U.S. manufacturer, which was not named, for 27 servers costing about $7.6 million, shipped them to Kuala Lumpur and then had them rerouted to China. Courthouse News described the hardware as built on Nvidia's H100 chips.

The FBI, the Commerce Department's Bureau of Industry and Security and the Defense Criminal Investigative Service investigated the case. Unnamed co-conspirators are referenced in the charges.

Why It Matters

Washington has restricted exports of advanced AI chips and the servers that contain them to China since 2022, arguing they could support military and surveillance uses. The H100 was Nvidia's flagship data center chip for much of the generative AI boom and is among the products covered by those rules.

The case shows a pattern export enforcers have flagged repeatedly: equipment is sold to an intermediary in a country without license requirements, then moved onward. Malaysia and Singapore have come up in several earlier U.S. investigations into diverted AI hardware.

Officials framed the case in national security terms. Assistant Attorney General John A. Eisenberg of the National Security Division said the department would protect the U.S. lead in AI chips from diversion by economic and military rivals. FBI Assistant Director Roman Rozhavsky went further, saying the investigation showed Lui allegedly sold hundreds of millions of dollars' worth of the technology to the Chinese government. John E. Helsing of the Defense Criminal Investigative Service said such technologies give U.S. forces core advantages.

Context

The prosecution follows other cases over diverted Nvidia hardware. Courthouse News pointed to a 2025 case in which two Chinese nationals living in Southern California were charged with illegally shipping tens of millions of dollars' worth of Nvidia chips. Lawmakers have pushed for location-tracking and tighter reporting rules on AI chips to make such diversion harder to hide.

What to Watch

The next steps are Lui's arraignment and any plea. Prosecutors have not named the co-conspirators or the U.S. server maker, and further charges could follow. Watch also for any Commerce Department action against the Malaysian transshipment companies involved, and for pressure on Malaysia and Singapore to tighten their own controls on re-exported AI hardware.