The $300 million Nvidia smuggling case shows how export controls leak
Key takeaways
- US prosecutors charged Earthmade Computer owner Greg Lui over about $300 million of Nvidia-powered servers allegedly shipped to China in 2023 and 2024.
- The servers were allegedly routed through Malaysia and Singapore, where the same US export licences were not required.
- In a separate case in August, Taiwan indicted nine people, including Nvidia and Super Micro employees.
$300 million. That is the value of export-controlled servers, reportedly packed with Nvidia GPUs, that US prosecutors say a California company shipped to China without a licence. Greg Lui, 38, owner of Earthmade Computer, was arrested on Thursday and charged with conspiring to violate US export controls, outbound smuggling and conspiracy to commit money laundering, according to Benzinga.
How the alleged Nvidia chip smuggling scheme worked
Prosecutors say Earthmade bought servers from US manufacturers in 2023 and 2024 and sent them to China without the Commerce Department licences they needed. One detail shows the scale: a single purchase order for 27 servers with Nvidia H100 GPUs, worth about $7.6 million.
The route is the part worth watching. The equipment allegedly went through Malaysia and Singapore, where shipments did not need the same US export licences, before being re-exported to China. In plain terms, the rules applied to the final destination, and the paperwork named a different one.
Nvidia did not immediately respond to Benzinga's request for comment, and the company has not been charged with anything in this case.
Why the questions are now about Nvidia
The arrest landed the same day as a Bloomberg feature reporting that Nvidia's chips keep reaching China despite US curbs, and that officials are asking why the company missed red flags. It is not an isolated case either. In August, Taiwanese prosecutors indicted nine people, including employees of Nvidia and Super Micro, over alleged illegal exports of high-end AI servers to mainland China, as Bloomberg reported at the time.
The US first restricted Nvidia's advanced chip exports to China in 2022 and has widened the rules since. Each new case suggests the controls hold at the factory gate and leak further down the chain, through resellers, server builders and transit countries. That pushes Nvidia toward policing where its hardware ends up after it leaves its hands, which is much harder than shipping it.
The pressure runs the other way too. Chinese labs are working to need Nvidia less, as we covered with DeepSeek and Huawei's push against CUDA.
What to watch next
First, whether Washington adds tracking or end-user checks that land on Nvidia and its server partners rather than only on exporters. Second, whether Malaysia and Singapore tighten their own transit rules. The demand driving all this is easy to see in the scale of AI data centres, which we covered in how much power AI data centres use. The open question is how much effort Nvidia puts into knowing where its chips end up.
