The arrest of Greg Lui puts a fresh spotlight on a central problem in the AI hardware race: keeping export-controlled Nvidia chips out of China when shipments can pass through several countries before reaching their alleged final destination.
According to the Department of Justice, Lui is accused of using false documentation to conceal shipments of high-end computer servers worth more than $300 million. The servers allegedly contained Nvidia A100 GPUs and H100 GPUs, chips that can train large language models and process large amounts of data.
What prosecutors allege
Lui, 38, is the CEO of Earthmade Computer. The Department of Justice accused him of working with freight-forwarding firms in South Asian countries like Malaysia and Singapore to divert export-controlled servers into China.
The alleged scheme began in October 2023 and continued until August 2026. Prosecutors said emails and bank records helped expose how the shipments moved and how the paperwork was allegedly structured.
One 2024 email discussed an order for 70 servers with export-restricted GPUs. Those servers were fraudulently presented as being destined for Malaysia, according to the Department of Justice. After Lui submitted a purchase order to a US manufacturer for 27 servers for approximately $7,614,000, prosecutors alleged that a co-conspirator told a Malaysian government official that all 27 were shipped to China.
Another shipment allegedly involved 92 export-controlled servers routed through Singapore to Malaysia, then Hong Kong. The FBI alleged the chips ultimately went to a Chinese firm based in Hangzhou, which The Wall Street Journal last year described as China’s AI hub.
Why the servers matter
The chips at the center of the case are not Nvidia’s most advanced chips. Even so, the source article states that they can process large amounts of data and train large language models.
That capability is why US officials view access to these chips as a national security issue. The concern described in the case is that China could use enough advanced AI hardware to move faster in artificial intelligence or strengthen its military.
The alleged value of the shipments also matters. Prosecutors described servers worth more than $300 million, and said Lui’s firm received more than $176 million from the scheme in 2024.
Payment records from Lui’s accounts with Bank of America and JP Morgan were cited as further evidence of how the alleged smuggling business operated.
The paperwork at the center of the case
The case is not only about where servers moved. It is also about how the shipments were represented on paper.
In one flagged 2024 shipment, prosecutors said Lui shipped 100 Malaysian-bound servers, each containing Nvidia H100 GPUs worth over $22 million. He allegedly submitted fraudulent documentation from a fake buyer identifying its CEO as “Jackie Lui.”
The FBI also alleged that three years earlier, Lui “purchased the identifying documents of an individual whose identity is known to the grand jury and used this identity to conduct business transactions in furtherance of the export evasion scheme.”
Lui was arrested on three counts. He is accused of conspiring to violate the Export Control Reform Act and the Export Administration Regulations, as well as federal smuggling and money laundering laws.
If found guilty of either the conspiracy or money laundering counts, he faces up to 20 years in prison. The smuggling charge carries a maximum penalty of up to 10 years.
Nvidia faces broader scrutiny
Lui’s arrest follows another smuggling-related case linked to an Nvidia senior manager based in Taiwan and allegedly run by ex-Supermicro staff in that country.
At that time, Nvidia CEO Jensen Huang urged Supermicro to fix its compliance problem while saying there was no evidence of smuggling. Since then, as more arrests have followed, Nvidia has shifted from denying smuggling to arguing that diverted chips and servers make up a small part of China’s AI industry.
On Thursday, a spokesperson told Bloomberg that “less than one half of one percent to Nvidia products” have allegedly been diverted to China. The same spokesperson said, “Governments and media have found insignificant diversion of controlled US products—a drop in the bucket compared to the ocean of domestic compute China already has.”
Experts cited in the source said the black market is “hard to measure” and likely larger than what has been reported. A Bloomberg investigation, “based on conversations with dozens of people across five countries,” described growing questions about Nvidia’s compliance “blind spots.”
Officials around the world suspect hundreds of thousands of AI chips may be moving through a shadow trade. Bloomberg reported that those chips may be powering small data centers and potentially even “a handful of hyperscalers” in China.
The compliance question
US officials want Nvidia to voluntarily tighten its protocols and flag more suspicious shipments. The concern is that chips could otherwise reach leading Chinese firms, including DeepSeek, which Donald Trump has accused of stealing US technology to quickly expand Chinese AI capabilities.
Bloomberg reported that officials and industry experts are questioning how Nvidia failed to catch red flags. Officials suggested facilities in Thailand, Malaysia, and Singapore should receive the most scrutiny.
Nvidia screens buyers and has blocked shipments when end buyers are unknown. But US officials cited by Bloomberg believe some suspicious shipments could have been flagged more easily.
In one example, Nvidia and Supermicro visited a Taiwanese facility that bought high-end chips later passed on to a Chinese firm. Taiwan’s Coast Guard later “noticed discrepancies in shipping manifests,” Bloomberg reported, and seized the bulk of export-controlled servers. The FBI alleged the facility “was clearly insufficient to house all the ordered servers.”
In another case, Bloomberg reported that Nvidia did not notice a small data center in Thailand diverting chips while relying on fake leases to purchase bulk orders. Nvidia would not comment on whether that site was ever visited.
Nvidia disputes the idea that it could have stopped the shipments officials have flagged. A spokesperson told Bloomberg that “a startup’s growth plan in a friendly nation is an opportunity for America, not a ‘red flag’ to be feared.”
The company also told Bloomberg it would continue working with Megaspeed until ordered to stop. Nvidia would not comment on whether it had conducted urgent checks requested by the US government to ensure Megaspeed was not diverting tens of thousands of excess AI chips into China.
For export controls, the case shows the practical challenge: the restricted product may be clear, but the path from buyer to end user can be much harder to verify.