U.S. uncovers scheme to reroute Nvidia GPUs worth $160 million to China despite export bans

U.S. authorities announced Tuesday that they have shut down yet another China-linked smuggling network that trafficked or attempted to traffic more than $160 million in export-controlled Nvidia AI chips.

According to a press release from the U.S. Attorney’s Office, two businessmen were taken into custody, while a Houston-based company and its owner have already pleaded guilty to chip smuggling as part of the wider investigation.

The case comes as Washington steps up its enforcement of export controls aimed at curbing China’s access to advanced AI technologies, including Nvidia’s Graphics Processing Units. 

The operation, dubbed “Operation Gatekeeper,” exposed efforts to funnel cutting-edge AI chips — with military and civilian applications — to entities that could undermine U.S. national security, according to a statement from U.S. Attorney Nicholas J. Ganjei for the Southern District of Texas.

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

Officials said Hsu and associates had exported or attempted to export at least $160 million worth of Nvidia H100 and H200 GPUs between October 2024 and May 2025.

The H200 and H100 models, while not Nvidia’s most advanced chips, still require a special license to be shipped to China under current controls.

Hsu’s operation allegedly falsified shipping documents to misclassify the GPUs and hide their true destinations, including China, Hong Kong and other prohibited locations. Investigators traced more than $50 million in funds originating from China to help fund the scheme by Hsu and Hao Global.

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

In a statement shared with CNBC, an Nvidia spokesperson said that export controls remain rigorous and that “even sales of older generation products on the secondary market are subject to strict scrutiny and review.”

“While millions of controlled GPUs are in service at businesses, homes, and schools, we will continue to work with the government and our customers to ensure that second-hand smuggling does not occur,” the spokesperson said.