Scheme to Ship GPUs to China Uncovers $160 Million Export‑Evasion Network

U.S. authorities announced Tuesday that they have dismantled another China‑linked smuggling network that moved or attempted to move more than $160 million worth of export‑controlled NVIDIA AI chips.

According to a press release from the U.S. Attorney’s Office for the Southern District of Texas, two businessmen were taken into custody, and a Houston‑based company along with its owner have already pleaded guilty to the illegal export of the chips as part of the broader investigation.

The bust is part of a heightened enforcement effort aimed at limiting China’s access to advanced artificial‑intelligence hardware, particularly NVIDIA’s high‑performance graphics processing units (GPUs).

The operation, dubbed “Operation Gatekeeper,” exposed a coordinated scheme to funnel cutting‑edge AI chips—devices with both civilian and military applications—to entities that could threaten U.S. national security, according to U.S. Attorney Nicholas J. Ganjei.

Newly unsealed court documents reveal that Alan Hao Hsu, 43, of Missouri City, Texas, and his firm Hao Global LLC, pleaded guilty on Oct. 10 to smuggling and unlawful export activities.

Investigators say Hsu and his associates exported or attempted to export at least $160 million worth of NVIDIA H100 and H200 GPUs between October 2024 and May 2025. Although the H200 and H100 are not the most cutting‑edge models in NVIDIA’s portfolio, they still require a specific export license to be shipped to China under current U.S. controls.

The scheme allegedly involved falsifying shipping documents to misclassify the GPUs and conceal their ultimate destinations, which included mainland China, Hong Kong, and other prohibited locations. More than $50 million in funds traced back to Chinese sources were used to finance the operation.

Hsu, who remains free on bond, faces up to 10 years in prison at his sentencing hearing on Feb. 18, while Hao Global could be hit with fines up to twice the amount of its illicit earnings plus a period of probation.

In a statement, an NVIDIA spokesperson emphasized that export controls remain “rigorous” and that even sales of older‑generation products on the secondary market are subject to “strict scrutiny and review.” The company added that it will continue to cooperate with the government and its customers to prevent second‑hand smuggling.

U.S. officials also charged Fanyue Gong, 43, a Chinese citizen residing in New York, and Benlin Yuan, 58, a Canadian citizen based in Ontario, as part of the investigation.

Yuan serves as chief executive of a U.S. subsidiary of a Beijing‑headquartered Chinese IT firm, while Gong owns a New York technology company. Both are alleged to have conspired independently with a Hong Kong logistics provider and a China‑based AI firm to evade export restrictions.

Prosecutors say Gong used “straw purchasers” and intermediaries to acquire GPUs by misrepresenting the end customers as being located in the United States or in unrestricted third‑country markets. Workers at U.S. warehouses allegedly re‑branded the shipments under fictitious names and mislabelled them as generic parts destined for China and Hong Kong.

Yuan is accused of recruiting inspectors for the Hong Kong firm, instructing them to conceal Chinese destinations, devising cover stories to release detained shipments, and providing false information to authorities. He also allegedly managed storage facilities for additional GPU exports.

If convicted, Yuan could face up to 20 years in prison for conspiracy to violate the Export Control Reform Act, while Gong could receive a maximum of 10 years for conspiracy to smuggle.

The investigation was coordinated with the Commerce Department’s Bureau of Industry and Security, the agency that enforces U.S. export controls on high‑performance computing hardware. This case follows a series of recent busts targeting unauthorized NVIDIA exports.

Lawmakers have been pushing for tighter oversight of U.S. chip controls after reports of loopholes in existing regulations. At the same time, the President signaled this week that he would permit NVIDIA to ship its H200 chips to “approved customers” in China and elsewhere, provided Washington captures a 25 percent share of the profits.

Although the H200 is not the flagship model in NVIDIA’s lineup, it would become the most advanced GPU legally available to Chinese firms, potentially satisfying growing demand for AI compute power within China’s burgeoning AI sector.

The broader implications of the bust underscore the tension between U.S. national‑security objectives and the global race for AI dominance. Restricting access to high‑performance GPUs could slow the development of advanced models in China, but it also risks driving Chinese firms to accelerate indigenous chip‑design programs or to seek alternative supply chains, further fragmenting the global semiconductor market.

For companies like NVIDIA, the enforcement actions highlight the importance of robust compliance programs, end‑to‑end visibility in the supply chain, and proactive engagement with regulators to navigate an increasingly complex geopolitical landscape.