Two Southern California residents have been arrested for allegedly illegally exporting “tens of millions of dollars’ worth of sensitive microchips used in artificial intelligence (AI) applications” to China. They should be held tight.
According to a news release from the U.S. Department of Justice (DOJ), Chuan Geng, 28, and Shiwei Yang, 28, have been charged with violating the Export Control Reform Act, a felony that carries a statutory maximum penalty of 20 years in prison. The release stated that Geng surrendered to federal authorities on Saturday and Yang had been arrested earlier that day. The DOJ stated that from 2022 to last month, the pair sent graphic processing units, which they described as “specialized computer parts used for modern computing,” to Singapore and Malaysia through their El Monte-based company ALX Solutions Inc.
“A review of export records, business records, and company websites indicates that a December 2024 shipment and at least 20 previous shipments by ALX Solutions involved exports from the U.S. to shipping and freight-forwarding companies in Singapore and Malaysia, which commonly are used as transshipment points to conceal illegal shipments to China,” the release stated. The payments received by ALX Solutions came not from the purported recipients of the chips, but from “companies based in Hong Kong and China, including a $1 million payment from a China-based company in January 2024,” the DOJ said.
“ALX Solutions has not received payments from the entities to which they purportedly exported goods. Instead, ALX Solutions received numerous payments from companies based in Hong Kong and China, including a $1 million payment from a China-based company in January 2024,” they continued. According to the complaint and public information, the chip – made by a manufacturer of high-performance AI chips – is the “most powerful GPU chip on the market,” and is “designed specifically for AI applications,” such as “to develop self-driving cars, medical diagnosis systems, and other AI-powered applications.” China would require special approval from the U.S. Department of Commerce, permission that the DOJ said was never sought or granted.
Geng, a legal permanent resident, was released on $250,000 bond. Yang, who overstayed her visa, has a detention hearing set for August 12th.