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By Robert Birsel
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U.S. authorities have broken up a network that smuggled millions of dollars worth of advanced artificial intelligence (AI) computer chips to China and have detained two Chinese natives linked to the operation, the Department of Justice (DOJ) has said.
The DOJ announcement came on the same day that President Donald Trump announced he will allow Nvidia to sell its advanced H200 chips to "approved customers" in China.
Newsweek contacted the Chinese Foreign Ministry seeking comment.
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Why It Matters
The U.S. has been attempting to contain China’s business and technological advances in the race for world-beating artificial intelligence by restricting exports of advanced chips made by the U.S. company Nvidia.
In response, Chinese companies are rushing to develop their own advanced chipmaking industry and domestic alternatives to Nvidia chips. Developers in China launched DeepSeek, an AI model capable of rivaling ChatGPT, in January.
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What To Know
The DOJ said Operation Gatekeeper had disrupted a trafficking network and resulted in the seizure of more than $50 million in advanced graphic processing units (GPUs) destined for China and other restricted locations.
The DOJ said a Houston company and its owner also pleaded guilty to smuggling cutting-edge AI technology out of the United States, and U.S. authorities seized more than $50 million in Nvidia technologies and cash.
According to court documents, Alan Hao Hsu and his Texas company, Hao Global, pleaded guilty to smuggling and unlawful export activities on October 10, 2025. The documents showed that between October 2024 and May 2025, Hsu and others knowingly exported and attempted to export at least $160-million-worth of export-controlled Nvidia H100 and H200 Tensor Core GPUs.
The H100 and H200 are high-speed GPUs used for AI applications and high-performance computing. They are designed to process massive amounts of data, advancing generative AI and large language models and accelerating scientific computing. The GPUs are used for both civilian and military applications, the DOJ said.
The Justice Department said Hsu others falsified shipping paperwork, misclassifying the true nature of the goods and their recipients to conceal the destination of the GPUs.
Hsu and Hao Global also received more than $50 million in wire transfers from China to help fund the scheme and the GPUs were shipped to China, Hong Kong and other places in violation of U.S. export laws, the DOJ said.
Charged in connection with the smuggling network are two Chinese natives—Fanyue Gong, 43, a Chinese citizen living in New York, and Benlin Yuan, 58, a Canadian citizen—who the DOJ said independently conspired with employees of a Hong Kong-based logistics company and a China-based AI technology company to circumvent U.S. export controls.
“Gong and his accomplices allegedly led a complex scheme to smuggle high-performance graphic processing units to China in violation of U.S. export laws,” said Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence Division.
Yuan took part in the deception and, among other things, allegedly helping to recruit and organize people to inspect the mislabeled GPUs on behalf of the Hong Kong logistics company and allegedly agreeing to direct inspectors not to say the goods were destined for China, the DOJ said, citing court documents.
Hsu was allowed to remain on bond pending sentencing. Yuan and Gong are in custody pending further criminal proceedings, the DOJ said.
Newsweek was not able to identify and contact legal representatives of Gong and Yuan.
What People Are Saying
Assistant Attorney General for National Security John A. Eisenberg said: “The United States has long emphasized the importance of innovation and is responsible for an incredible amount of cutting-edge technology, such as the advanced computer chips that make modern AI possible. This advantage isn’t free, but rather the result of our engineers’ and scientists’ hard work and sacrifice.”
President Donald Trump said on his Truth Social page in announcing that Nvidia can sell its H200 chips to approved customers in China: "We will protect National Security, create American Jobs, and keep America's lead in AI."
What Happens Next
Hsu faces up to 10 years in prison at sentencing on February 18. If convicted, Yuan faces up to 20 years in prison and a fine of up to $1 million. Gong faces up to 10 years in prison for conspiring to smuggle goods out of the United States.
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