NVIDIA AI Computing Card captured in Hangzhou, Zhejiang Province, China on Dec. 9, 2025.
Cfoto | Future Publishing | Getty Images
U.S. authorities announced Tuesday that they have shut down yet another China-linked smuggling network that trafficked or attempted to traffic more than $160 million in export-controlled Nvidia AI chips.
According to a press release from the U.S. Attorney’s Office, two businessmen were taken into custody, while a Houston-based company and its owner have already pleaded guilty to chip smuggling as part of the wider investigation.
The case comes as Washington steps up its enforcement of export controls aimed at curbing China’s access to advanced AI technologies, including Nvidia’s Graphics Processing Units.
The operation, dubbed “Operation Gatekeeper,” exposed efforts to funnel cutting-edge AI chips — with military and civilian applications — to entities that could undermine U.S. national security, according to a statement from U.S. Attorney Nicholas J. Ganjei for the Southern District of Texas.
Newly unsealed documents show that Alan Hao Hsu, 43, of Missouri City, Texas, and his company, Hao Global LLC, pleaded guilty to smuggling and unlawful export activities on Oct. 10.
Officials said Hsu and associates had 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, while not Nvidia’s most advanced chips, still require a special license to be shipped to China under current controls.
Hsu’s operation allegedly falsified shipping documents to misclassify the GPUs and hide their true destinations, including China, Hong Kong and other prohibited locations. Investigators traced more than $50 million in funds originating from China to help fund the scheme by Hsu and Hao Global.
Hsu, who remains free on bond, faces up to 10 years in prison at his Feb. 18 sentencing, while Hao Global could be hit with fines up to twice its illicit gains plus probation.
In a statement shared with CNBC, an Nvidia spokesperson said that export controls remain rigorous and that “even sales of older generation products on the secondary market are subject to strict scrutiny and review.”
“While millions of controlled GPUs are in service at businesses, homes, and schools, we will continue to work with the government and our customers to ensure that second-hand smuggling does not occur,” the spokesperson said.
Relabeled Nvidia GPUs
U.S. officials also charged Fanyue Gong, 43, a Chinese citizen residing in New York, and Benlin Yuan, 58, a Canadian citizen living in Ontario, as part of their investigation.
Yuan serves as CEO of a U.S. subsidiary of a Beijing-headquartered Chinese IT company, while Gong owns a New York technology firm. Both allegedly conspired independently with a Hong Kong logistics company and a China-based AI firm to evade chip controls.
Prosecutors alleged Gong used straw purchasers and intermediaries to acquire GPUs by misrepresenting the end customers as being in the U.S. or in unrestricted third countries.
Workers at U.S. warehouses would then rebrand shipments under fictitious names and mislabel them as generic parts for export to China and Hong Kong, according to the case.
Meanwhile, Yuan is accused of recruiting inspectors for the Hong Kong firm, instructing them to conceal Chinese destinations, devising cover stories to release detained shipments, and providing false information to authorities. He also allegedly handled storage for additional GPU exports.
If convicted, Yuan could face up to 20 years for conspiracy to violate the Export Control Reform Act, while Gong could receive as much as 10 years for conspiracy to smuggle.
The investigation involved the Commerce Department’s Bureau of Industry and Security, which oversees and enforces U.S. export controls, including those on Nvidia. The case comes amid a flurry of similar busts regarding unauthorized Nvidia exports in recent months.
Lawmakers have been attempting to tighten oversight of U.S. chip controls following reports of loopholes in existing rules.
However, the U.S. President signaled this week that he would allow Nvidia to ship its H200 chips to “approved customers” in China and elsewhere, on the condition that Washington gets a 25% cut on the profits.
Although the H200 isn’t state-of-the-art in Nvidia’s lineup, it would become the most advanced model available to China and could help satiate demand for AI compute power in the country.
