Chinese Nationals Caught Smuggling Sensitive AI Chips to China Through U.S. Company
Two Chinese nationals, including an illegal immigrant, have been arrested in California for allegedly exporting tens of millions of dollars’ worth of restricted AI microchips to China — a serious violation of U.S. export laws that highlights the growing threat of Chinese infiltration into American technology sectors.
According to the Department of Justice, Chuan Geng and Shiwei Yang, both 28, were charged under the Export Control Reform Act, which carries a potential prison sentence of up to 20 years. Through their company, ALX Solutions Inc., based in El Monte, California, the pair is accused of illegally sending sensitive graphic processing units (GPUs) — components vital for AI systems — to China without the required licenses.
The illegal export scheme reportedly began in October 2022 and continued until July 2025, coinciding with rising U.S. restrictions on the sale of advanced chips to China. In a clear attempt to circumvent American regulations, the company allegedly routed shipments through Singapore and Malaysia, commonly used as transshipment points to disguise final destinations.
One shipment in December 2024 falsely declared compliance with federal export laws but actually contained high-performance AI chips that require export licenses. Investigators found no license applications from the defendants or their company. Furthermore, financial records show no payments from the listed recipients, but instead, large sums — including a $1 million transfer — coming from Chinese and Hong Kong-based entities.
These GPUs are not generic computing tools — they are cutting-edge AI processors used for technologies like autonomous vehicles and medical diagnostics. In the hands of adversarial governments, such tools could dramatically advance state-sponsored surveillance, military AI development, or cyberwarfare capabilities.
The case raises broader national security concerns. Law enforcement discovered incriminating communications on the suspects’ phones, detailing efforts to evade U.S. export laws and ship restricted technology to China under false pretenses. The DOJ's swift action signals growing vigilance, but the case also underscores how Chinese nationals continue targeting American innovations, especially in strategic sectors like artificial intelligence.
This isn’t an isolated incident. The U.S. has repeatedly warned of Chinese attempts to exploit U.S. institutions, including tech firms and universities, for espionage or intellectual property theft. The use of shell companies, visa overstays, and backdoor payments are all part of a calculated strategy to undermine American leadership in future-defining technologies.
Last month, President Donald Trump emphasized the urgency of the situation at the "Winning the AI Race" summit. He introduced a series of executive orders designed to strengthen U.S. infrastructure, limit ideological bias in government AI use, and streamline AI exports to allied nations — all with the goal of outpacing China in the global AI competition.
While these measures are crucial, public awareness remains key. The American people must stay alert to the growing risks posed by Chinese economic espionage, especially as the lines between commercial and national security interests continue to blur.
China is not just competing with the United States — it is actively seeking to undermine America’s technological edge through deception, infiltration, and illegal acquisition. Americans must recognize that safeguarding innovation is not only a government responsibility, but a national imperative.
