A 38-year-old California tech executive was arrested October 1 on charges of orchestrating a scheme to move more than $300 million in Nvidia-equipped servers to China through falsified export paperwork, the US Justice Department said. Prosecutors named the defendant as Greg Lui, also known as Yiu Kong Lui, 38, of San Gabriel, and allege his company, Earthmade Computer Inc. of City of Industry, was the vehicle for shipments disguised as legitimate exports.
Lui faces three federal counts: conspiracy to violate the Export Control Reform Act and Export Administration Regulations, outbound smuggling, and conspiracy to commit money laundering. The first and third each carry a maximum sentence of 20 years, while the smuggling count carries a maximum of 10, for a combined theoretical maximum of 50 years. He was arrested Thursday, October 1, and is set to be arraigned in federal court. No trial date or plea has been reported, and under US law he is presumed innocent until proven guilty.
What prosecutors allege
In a 22-page indictment, prosecutors said Lui worked with several unnamed co-conspirators who operated shell companies to first get the hardware to either Malaysia or Singapore, then into China. The criminal case names the City of Industry, California facility as the point of origin for the shipments, with the Southeast Asian routing used to obscure the final destination from export control specialists at the chipmakers and from the US Commerce Department.
Federal prosecutors allege that from around October 2023 until at least August 2026, Lui and unnamed co-conspirators bought high-end servers loaded with controlled Nvidia GPUs from US distributors and re-routed them to Chinese buyers through Malaysia, Singapore and Hong Kong.
Nvidia’s blind spot
The case joins a line of enforcement actions that keep reaching further up the hardware food chain. Last March, federal agents arrested Super Micro Computer co-founder Yih-Shyan Wally Liaw, 71, on charges of conspiring to smuggle roughly $2.5 billion worth of Nvidia AI chip-equipped servers to China, along with two co-conspirators, Ruei-Tsang Steven Chang and Ting-Wei Willy Sun. Liaw and Sun were arrested in California, and Chang remains at large, according to court records. Earlier this year prosecutors also filed criminal charges against two former Supermicro logistics managers for allegedly facilitating the export of servers to China-linked entities.
Separately, TweakTown reported that in other cases federal authorities dismantled what they described as trafficking networks moving roughly $160 million worth of Nvidia AI chips to China using similar South Asian routing. The Commerce Department has been tightening the AI chip export regime steadily since October 2022, and courts have not slowed it down.
Nvidia itself has faced questions about its internal controls. Bloomberg ran a feature October 1 titled Nvidia’s Blind Spots Exposed by China Chip Smuggling, noting that a single blurry surveillance frame from a Southeast Asian warehouse, a woman using a hair dryer to peel serial number stickers off server packaging, has become the defining image of the supply-side problem the company keeps arguing is not its fault. Legally, the manufacturer is not the exporter in most of these cases, and enforcement has landed on the intermediaries and their distributor networks.
Why the regime keeps tightening
The export-control story started with a single rule in October 2022 that restricted the sale of A100 and H100 class accelerators to China, and it has grown into a lattice of license requirements, country tiers and entity list designations that chip lawyers now tract as a practice area of its own. Each successive round of controls was justified in Washington by the smuggling cases that preceded it, and each round of controls generated a whole new generation of smuggling schemes, which is the loop regulators find themselves in.
The enforcement targets have also moved up the food chain. The first wave of cases landed on freight forwarders and brokers. The Supermicro case reached a public company co-founder with a stock option packet and a career to lose. The techies arrested at Supermicro included a Senior Vice President of Business Development, meaning the defendant pool now includes people who sat in customer-facing roles at the very companies whose chips were being diverted. This is the highest-profile arrest cycle the AI chip regime has yet produced.
What it means for the chip market
Procurement desks keep repricing the controls into their plans, and Big Tech continues to circle the chip supply story regardless. The Semiconductor Industry Association said in September that CEO John Neuffer lauded seven CHIPS R&D awards to accelerate the semiconductor supply chain, part of a pattern where chip availability and the political agenda of keeping them domestic have become intertwined.
SIA data also points to the sheer scale of the legitimate market that the smuggling cases skim from: July 2026 worldwide chip sales hit $146.8 billion, up 135.1% year over year, with annual 2026 sales tracking to more than $1.5 trillion. Against that scale, a $300 million diversion channel sounds like a rounding error, but the enforcement message matters more than the dollar figure, because China-bound intermediaries now price in a real risk of arrest and asset seizure across the entire Southeast Asian re-routing complex.
China, meanwhile, is pushing its domestic alternative effort, with firms such as Cambricon, Huawei and Moore Threads working to close the gap on AI accelerators, though analysts widely agree the domestic stack still trails Nvidia’s performance for training frontier-scale models. Each enforcement action nudges more demand toward those domestic suppliers, which is precisely what the US controls regime is trying to prevent, an irony that has been pointed out by both Chinese state media and Western chip lawyers. On the other side of the ledger, each successful prosecution raises the operating cost of the gray channels that feed the secondhand Chinese accelerator market, which is what the regime is designed to do.
Lui faces an initial appearance and arraignment in federal court, and any trial is likely many months out. If convicted on all three counts he could face up to 50 years, though federal sentencing guidelines in white-collar conspiracy cases of this profile typically produce outcomes far below the statutory maximum, especially where the defendant pleads guilty and cooperates. Neither Earthmade Computer nor Lui has issued a public statement on the charges.