Two Men Arrested, Justice Department Says They Moved Nvidia AI Chips to China

The U.S. Justice Department said two men have been arrested on allegations they ran a sophisticated smuggling network that moved Nvidia H100 and H200 graphics processing units to China. Prosecutors described in court filings, summarized by Reuters, that the alleged scheme relied on straw purchasers, falsified paperwork and relabeling to route export controlled chips through warehouses in the United States before sending them on to China and other destinations.

Authorities estimate the operation moved or attempted to move at least $160 million worth of chips. The Justice Department did not name the accused in its initial announcement, but said the investigation uncovered a layered effort to conceal the true buyers and destinations of the GPUs. The filings portray a deliberate effort to evade U.S. export controls that have restricted the flow of advanced artificial intelligence hardware to Chinese customers.

Nvidia’s H100 and H200 processors are among the most powerful commercially available accelerators for large scale AI workloads. Since 2022 the United States has sought to limit the transfer of these and similar technologies to countries seen as strategic competitors, citing national security and the dual use nature of high performance computing. The alleged syndicate’s tactics mirror methods used in prior export control cases, where intermediaries and falsified documents masked end users and end uses.

The announcement came the same day the White House signaled a willingness to permit some exports of H200 chips under revised rules, highlighting a tension at the center of U.S. technology policy. Enforcement actions like this prosecution underscore the United States commitment to policing illegal transfers, even as policymakers recalibrate which shipments will be permitted under evolving diplomatic and economic considerations. The juxtaposition of prosecution and regulatory relaxation illustrates the complexity of managing cutting edge technology in a global market.

Legal experts say such cases can complicate international cooperation on trade and law enforcement. When export rules change, investigators must determine which shipments were illegal under the rules in force at the time, and which may now be lawful, a distinction that can affect both criminal charges and customs enforcement. The alleged use of U.S. warehouses as transit points raises questions about vulnerabilities in supply chains and the need for tighter vetting of buyers and freight forwarders.

Beyond legal consequences for the accused, the case is likely to reverberate through the semiconductor and cloud infrastructure industries. Companies that build, ship and host advanced AI hardware face increased scrutiny from regulators and customers. For policymakers, the episode is a reminder that technical restrictions on high end chips require vigilant enforcement to be effective, and that adjustments to policy must account for the ready ingenuity of networks seeking to bypass controls. The Justice Department said the investigation is ongoing.