Accused Three-Person Smuggling Ring Faces Potential 20-year Imprisonment for transportation of AI chips valued at millions to China, worth tens of millions of dollars
In a significant development, Chuan Geng and Shiwei Yang, two Chinese nationals, have been arrested in California and criminally charged under the Export Control Reform Act for illegally exporting advanced AI chips from the US to China without the required licenses.
The exports were handled through the California-based company ALX Solutions Inc., where Geng is listed as handling finances, Yang is the secretary, and the third alleged member has not been named. Since the rollout of the previous Biden administration's AI Diffusion Rule and the Trump administration's following rescission and retooling of these export controls, smuggling operations appear to have become more sophisticated.
ALX Solutions allegedly sent at least 20 shipments intended for clients in China prior to December 2024, with at least one falsely labeled shipment containing GPUs that required a license for export to China. The company did not apply for, nor did they obtain, a license from the Commerce Department for the export of the GPUs. The shipments were often routed via Singapore and Malaysia to conceal the final destination.
Chuan Geng, a lawful permanent resident of the US, and Shiwei Yang, who is in the country illegally, face potentially up to 20 years in federal prison if convicted for their alleged violations of export controls designed to restrict China’s access to advanced AI chipset technology. Their phones were seized revealing communications about the illegal exports.
ALX Solutions purportedly received payments routed through Hong Kong and mainland China companies rather than directly from the shipping firms. A federal judge has ordered Geng's release on a $250,000 bond, while a detention hearing for Yang is scheduled for August 12. Arraignments for both Geng and Yang are scheduled for September 11.
The US Department of Justice accuses Geng and Yang of exporting "tens of millions of dollars' worth" of sensitive microchips used in AI applications between October 2022 and July 2025. The case highlights heightened US enforcement of export controls amid concerns over AI technology transfer to China. The involvement of ALX Solutions and the use of third countries for shipment indicate an organized effort to circumvent export restrictions.
As the legal proceedings unfold, the technology industry and the US government will be closely watching the outcome of this case, which has significant implications for the control and regulation of advanced AI technology exports.
[1] News Article 1 [2] News Article 2 [3] News Article 3 [4] News Article 4 [5] News Article 5
- The illegal export of advanced AI chips from the US to China, as alleged by the US Department of Justice, has been a significant focus of recent news articles [1, 2, 3, 4, 5].
- The Game of technology exports between the US and China seems to have escalated, with the race to dominate AI applications becoming more bet-like in nature [1, 2, 3, 4, 5].
- The use of artificial intelligence in the smuggling operation, such as the mislabeling of shipments and routing via third countries, suggests the involvement of sophisticated technology and perhaps even artificial-intelligence-driven algorithms [1, 2, 3, 4, 5].
- The season of lax export controls appears to be over, as the US government cracks down on illegal activities, like the case involving Chuan Geng and Shiwei Yang [1, 2, 3, 4, 5].
