Two arrested for smuggling AI chips to China; Nvidia says no to kill switches

The US Department of Justice (doj) said on Tuesday that two Chinese citizens were arrested for their alleged involvement in the illegal shipping of “tens of millions of dollars” from high -performance artificial intelligence chips to China.

The Ministry of Justice said that Chawan Jing and Choui Yang were arrested in California on August 2 and accused them of violating the export monitoring reform law, a felony of legal penalty of 20 years in prison.

Geng and Yang are accused of knowing “sensitive techniques”, including graphics processing units, to China from the United States through California -based ALX Solutions.

The Ministry of Justice did not call the company, which is allegedly smuggled, but quoted from a complaint, she said that the chip is “the most powerful in the market” and is “specially designed for artificial intelligence applications”. This description makes it possible to smuggle chips that are smuggled by NVIDIA. A Reuters report specifically named GPU on Nvidia H100 while chips are charged.

A review of the export documents by the Ministry of Justice found that AlX Solutions sent chips and other technology to shipping companies and companies that follow shipping in Singapore and Malaysia, but they received payments from entities in Hong Kong and China in return. The administration has also found communication records regarding technology shipping to Malaysia to roam specifically around US export restrictions.

“This issue shows that smuggling is not supported,” a NVIDIA spokesman said in a statement. “We sell our products primarily to well -known partners, including OEMS, who help us to ensure that all sales are compatible with American export control rules. Even relatively small exporters and shipments are subject to comprehensive review and scrutiny, and no limited products will have any service, support or updates.”

The news comes at a time when the United States is trying to know how to balance the promotion of global artificial intelligence and the imposition of export restrictions on China, which many in the West see a major threat in the artificial intelligence race. AI’s recently announced action plan in the Trump administration, which was recently announced the importance of strong export restrictions, but it shed light on the details.

One of the potential solutions to reduce the smuggling of chips that the United States government proposed in recent days is to carry out the tracement technology in chips to help capture smuggling, but the chips makers completely oppose such a step.

In the Blog Blog Blog, NVIDIA said that its graphics processing units do not include killing or background keys, and argued that construction in such tools would only lead to security solution.

The company wrote: “NVIDIA designs processors for more than 30 years. The inclusion of the background and killing into chips will be a gift for the infiltrators and hostile actors,” the company wrote. “This will undermine global digital infrastructure and the confidence of fracture in American technology. The law specified by companies is required to fix weaknesses – not their creation.”

“This is not a sound policy. It is an exaggerated reaction that would harm an irreplaceable way to the interests of economic and national security of America,” Nafidia wrote.

NVIDIA did not immediately respond for additional suspension requests.

To learn more about the troubled year for the semiconductor industry so far, here is a timetable that has been updated regularly of market news since the beginning of 2025.