U.S. Prosecutors Say $300 Million in Restricted AI Servers Was Routed Through Malaysia and Singapore to China
A California technology-company owner has been federally charged in an alleged scheme to move more than $300 million worth of export-controlled high-end computer servers from the United States to China by disguising their true destination and routing shipments through Malaysia and Singapore. Federal prosecutors say the servers contained U.S.-manufactured graphics processing units designed for advanced artificial-intelligence computing, technology that American export rules restrict because it can significantly contribute to the military capabilities of foreign adversaries.
Greg Lui, 38, also known as Yiu Kong Lui, owns Earthmade Computer Inc., a technology company based in California’s City of Industry. A federal indictment charges him with conspiracy to violate the Export Control Reform Act and Export Administration Regulations, outbound smuggling, and conspiracy to commit money laundering. If convicted on all charges, he could face a combined statutory maximum of 50 years in federal prison. The indictment is an allegation, and Lui is presumed innocent unless proven guilty beyond a reasonable doubt.
The case is important because prosecutors are describing more than a simple paperwork violation. According to the Justice Department, Lui and his alleged co-conspirators knew the servers were ultimately intended for China, where the technology required U.S. export licenses. Instead of applying for those licenses, they allegedly presented American manufacturers with documentation falsely identifying acceptable end users and destinations, then sent the equipment to countries where the same shipments could move without the China-specific export restrictions.
Malaysia and Singapore allegedly served as transit points. Once the controlled servers arrived there, prosecutors say they were re-exported to China. That structure illustrates one of the most difficult problems in enforcing U.S. technology controls: restrictions written around a final destination can be undermined if buyers create an intermediate commercial layer in a third country.
The alleged numbers show why this matters. From January through October 2024, Earthmade received more than $176 million from two Malaysia-based shipping companies connected to the scheme, according to the indictment. In one January 2024 transaction, Lui allegedly discussed an order for 70 servers containing export-restricted GPUs. He later submitted a purchase order to a U.S. manufacturer for 27 servers worth approximately $7.614 million.
Those 27 servers were then shipped from Los Angeles to Kuala Lumpur, Malaysia. The packing list reportedly identified the servers as containing GPUs that could not legally be exported to China without a license. Yet in March 2024, prosecutors say a co-conspirator emailed a Malaysian government official stating that the same 27 servers had ultimately been transshipped to a China-based buyer.
That sequence is the heart of the case. A shipment can appear legitimate at its first international stop while still violating U.S. export rules if the declared destination is only a waypoint and the real customer is in China. The effectiveness of American semiconductor controls therefore depends not only on whether a chip manufacturer refuses a direct shipment to China, but also on whether distributors, freight forwarders, resellers and overseas intermediaries can be trusted not to redirect the equipment later.
For the United States, advanced GPUs are strategically important because they provide the computing power behind large AI systems, data centers, scientific simulation and other high-performance applications. The Justice Department specifically notes that U.S. regulations restrict these high-end GPUs because they could make significant contributions to another country’s military potential. That means an alleged diversion scheme involving hundreds of millions of dollars in hardware is not merely a customs dispute. It can undermine a national-security policy designed to preserve U.S. advantages in advanced computing.
The danger is especially significant in the current U.S.-China technology competition. China has invested heavily in building domestic AI capability while facing restrictions on access to some of the most advanced American semiconductors. If controlled U.S. hardware can be obtained through third-country channels, then the intended effect of those restrictions is weakened even if direct exports remain tightly controlled.
This is why transshipment has become such an important issue. A company in Malaysia or Singapore can appear on paper to be the customer, even though the actual end user may be somewhere else. If exporters accept paperwork without independently verifying the ultimate destination, sophisticated buyers can exploit the gap between formal documentation and the physical movement of goods.
The indictment alleges exactly that kind of concealment. Prosecutors say false documentation was provided to U.S.-based manufacturers representing that the servers would be sent to permissible end users and destinations. Freight-forwarding companies were then used to move the servers overseas before they were allegedly redirected to China.
For American manufacturers, this case demonstrates that export compliance cannot end when a shipment leaves a U.S. warehouse. Companies selling advanced computing equipment need to examine who is paying, who actually controls the buyer, whether the customer has a plausible commercial need for the volume ordered, and whether the destination has become a recurring transshipment hub for China-bound technology.
Large financial flows can also provide warning signs. More than $176 million allegedly moved from two Malaysia-based shipping companies into Earthmade in less than a year. Financial institutions, equipment suppliers and logistics companies should treat unusually large or repetitive transactions involving restricted hardware as a reason for enhanced due diligence, especially when the commercial structure spans several jurisdictions.
The stakes are larger than protecting the revenue of American semiconductor companies. Advanced GPUs embody years of U.S. engineering, software development, semiconductor design and manufacturing investment. When restricted systems are allegedly diverted into China, the value transferred is not limited to the physical hardware. The recipient also gains computing capability that can support AI training, scientific research, industrial optimization and potentially military applications.
That distinction is crucial. Export controls are designed around capability. The concern is that advanced chips allow a competitor to do more than it could otherwise do, faster than it could otherwise do it. A sufficiently large cluster of high-end GPUs can accelerate the training of sophisticated AI systems, improve simulations and increase computing capacity across research and defense-related projects.
The alleged scheme also shows why enforcement must focus on networks rather than isolated shipments. A single reseller may be only one part of a broader chain involving buyers, shell entities, overseas freight companies, financial intermediaries and end users. Investigators therefore need to reconstruct the entire commercial route from the U.S. manufacturer to the final recipient.
The agencies investigating this case reflect that broader concern. The Commerce Department’s Bureau of Industry and Security Office of Export Enforcement, the Defense Criminal Investigative Service and the FBI are all involved. That combination underscores how advanced-technology smuggling sits at the intersection of trade enforcement, counterintelligence and defense security.
The case also provides a warning to countries that serve as technology-trade hubs. Malaysia and Singapore are major legitimate commercial centers with extensive electronics and logistics industries. Their role in this indictment does not mean their governments participated in the alleged diversion. It does show, however, why transshipment jurisdictions are strategically important to U.S. export enforcement.
If restricted technology can be legally exported to one country and then quietly redirected to China, the weakest compliance point in the international chain can determine whether American controls work at all.
That problem becomes more difficult as AI hardware becomes more valuable. High-end servers are expensive, compact relative to their computing capability, globally traded and commercially useful, making them attractive targets for diversion. The more China’s demand for restricted U.S. computing hardware grows, the greater the financial incentive for intermediaries to create routes around export rules.
American companies therefore need to treat end-user verification as a national-security responsibility rather than a paperwork exercise. A legitimate invoice, freight address or foreign company registration cannot by itself establish where equipment will finally go. Buyers of high-value AI servers should be examined for ownership, financing, customer relationships, shipping history and potential connections to China-bound resale networks.
The Greg Lui case remains an allegation that must be proven in court. But the structure described in the indictment is already significant: more than $300 million in controlled computing equipment, allegedly purchased through a California company, supported by false end-user documentation, routed through Malaysia and Singapore, and ultimately sent to China without the licenses required by U.S. law.
For Americans, the broader lesson is that restricting direct sales to China is only the first layer of technology protection. The real test is whether U.S. companies and enforcement agencies can identify the indirect routes that emerge when valuable technology becomes difficult to purchase openly.
China’s demand for advanced computing capacity gives those diversion networks a powerful economic incentive. Every successful transshipment can reduce the effectiveness of American controls and transfer strategically valuable computing power into a market those controls were specifically designed to restrict.
Protecting U.S. AI leadership therefore requires more than building better chips. It requires knowing where those chips go after they leave the factory.
