According to charging papers, shipping documents described the chips as generic computer parts, concealing endpoints in China, Hong Kong and other prohibited locations. Investigators also traced more than $50 million in Chinese funds that allegedly financed Hsu’s purchases.
Hsu remains free on bond and is scheduled for sentencing on Feb. 18. He faces up to 10 years in prison, while Hao Global could be fined up to twice the value of its illicit proceeds in addition to probation.
Additional defendants in New York and Ontario
Two other individuals were charged in related cases for allegedly working with separate China-based entities to acquire restricted chips.
Fanyue Gong, 43, a Chinese national residing in New York, owns a Manhattan technology firm that prosecutors say used straw purchasers and intermediaries to obtain GPUs. Court filings state that warehouse staff re-labeled outbound packages under fictitious names and listed the contents as low-value electronics before forwarding them to Hong Kong and mainland China.
Benlin Yuan, 58, a Canadian citizen living in Ontario, serves as chief executive of the U.S. arm of a Beijing information-technology company. Authorities allege Yuan coordinated inspectors at a Hong Kong logistics provider, instructed them to hide Chinese destinations, crafted cover stories to free detained shipments and arranged storage for additional GPU exports. He is charged with conspiracy to violate the Export Control Reform Act and could receive up to 20 years in prison if convicted. Gong faces a maximum 10-year sentence for conspiracy to smuggle.
Broader crackdown on AI hardware exports
The case highlights Washington’s intensified effort to safeguard advanced semiconductor technology from reaching entities that could threaten U.S. national security. Over the past year, the Bureau of Industry and Security has tightened licensing requirements on high-performance GPUs, including models that are no longer the most advanced in Nvidia’s lineup but still exceed performance thresholds set by regulators.
Enforcement officials said the H100 and H200 chips at the center of the case can accelerate machine-learning workloads and are therefore covered by restrictions aimed at preventing the development of sophisticated military or surveillance systems in China. “Even sales of older generation products on the secondary market are subject to strict scrutiny,” Nvidia said in a written statement, adding that the company cooperates with government agencies to combat unauthorized resellers.
The Commerce Department recently reported a rise in attempts to circumvent chip controls through trans-shipment and document falsification. An overview of current export rules is available on the agency’s website, which details licensing criteria and potential penalties for violations (U.S. Commerce Department).
Political debate over future shipments
The smuggling bust comes amid discussions in Washington about adjusting the scope of existing restrictions. President Donald Trump indicated this week that his administration would consider allowing Nvidia to supply H200 GPUs to “approved customers” in China and other regions if the U.S. government receives a 25 percent share of sales revenue. Although the H200 is no longer Nvidia’s flagship chip, it would represent the most powerful model legally available to Chinese buyers under current policy.
Meanwhile, lawmakers are studying additional legislation to close loopholes that have enabled unauthorized transfers of sensitive components. Recent congressional hearings examined ways to strengthen end-user verification and increase penalties for companies that knowingly misclassify high-performance chips.
“Operation Gatekeeper” remains ongoing, and investigators said further arrests or charges are possible as they analyze financial records and seized electronics tied to the network.
Crédito da imagem: Bloomberg
