*

Advanced chips were restricted to China in 2022 for US

national

security

*

Chinese nationals shipped them without required export

licenses

*

Nvidia ( NVDA ) says diverted products would have no support

(Adds Nvidia comment in paragraph 9, Super Micro comment in

paragraph 10, adds bullet points)

By Karen Freifeld

Aug 5 (Reuters) - Two Chinese nationals in California

were arrested and charged with illegally shipping tens of

millions of dollars' worth of AI chips to China, including

Nvidia H100s, the U.S. Justice Department said on

Tuesday.

Chuan Geng, 28, of Pasadena, and Shiwei Yang, 28, of El

Monte, exported the advanced Nvidia ( NVDA ) chips and other technology

to China from October 2022 through July 2025 without the

required licenses from the U.S. Commerce Department, the Justice

Department said, citing an affidavit filed with the complaint.

According to the affidavit, Geng and Yang's El Monte-based

company, ALX Solutions, was founded in 2022, shortly after the

U.S. imposed sweeping export controls on technology to China to

slow Beijing's military modernization and began to require

licenses for the chips. China opposed the U.S. move as harming

normal trade.

Over 20 shipments from ALX went to shipping and freight

forwarding companies in Singapore and Malaysia, which are often

used as transshipment points for illegal goods to China, a

federal agent, who works for the Commerce Department, said in

the affidavit.

ALX received a $1 million payment from a China-based company

in January 2024 and other payments from companies in Hong Kong

and China, not from the freight forwarding companies, the agent

said.

Nvidia H100s are advanced chips that can be used to train

large language models and many other applications.

Records show that from at least August 2023 to July 2024,

ALX Solutions bought over 200 Nvidia H100 chips from San Jose,

California-based server maker Super Micro Computer, declaring

that the customers were in Singapore and Japan, the agent said.

On one 2023 invoice valued at $28,453,855, ALX said the

customer was in Singapore, but a U.S. export control officer in

Singapore could not verify the chips arrived in the country and

the company did not exist at the listed location, the document

says.

"This case demonstrates that smuggling is a nonstarter," a

Nvidia ( NVDA ) spokesperson said in a statement. "We primarily sell our

products to well-known partners...who help us ensure that all

sales comply with U.S. export control rules."

Diverted products have "no service, support or updates," the

statement added.

Super Micro said in a statement it was "firmly committed to

compliance with all U.S. export control regulations." It said it

did not comment on ongoing legal matters, but cooperated with

authorities in any such proceedings.

Geng and Yang appeared in federal court in Los Angeles on

Monday, the Justice Department said. Geng, a permanent resident,

was released on $250,000 bond. Yang, who overstayed her visa,

has a detention hearing on August 12.

Lawyers for the defendants did not respond to requests for

comment.

(Reporting by Karen Freifeld; Editing by Alistair Bell, Bill

Berkrot and Lincoln Feast.)