A multimillion-dollar smuggling enterprise focused on shipping advanced artificial intelligence chips to China has been disrupted by U.S. authorities, the Justice Department announced Monday.
The DOJ’s Operation Gatekeeper revealed that a Texas-based company, Hao Global, orchestrated the smuggling of advanced Nvidia graphics processing units to China between October 2024 and last May, according to the department.
During that period, Hao Global smuggled about $160 million worth of Nvidia H100 and H200 Tensor Core GPUs, according to court documents, which are subject to U.S. export controls.
U.S. authorities also seized around $50 million worth of advanced Nvidia chips from the company.
The chips have a wide variety of uses and are most popularly used to improve artificial intelligence applications, including large language models and generative AI, according to the DOJ.
Alan Hao Hsu, owner of Hao Global, pleaded guilty to smuggling and unlawful export activities in October. According to the DOJ, he falsified shipping documents to conceal the nature of his packages to China and received about $50 million in Chinese wire transfers to fund the operation.
Mr. Hsu faces up to 10 years in prison and has a sentencing hearing scheduled for Feb. 18.
Two Chinese, Fanyue Gong, 43, and Benlin Yuan, 58, were also charged in connection with Mr. Hsu’s smuggling network. The two allegedly conspired with employees of a Hong Kong-based logistics company to disguise the shipments of Nvidia chips and convince inspectors that the shipments were not bound for China.
Mr. Gong faces up to 10 years in prison if convicted on the smuggling charge, and Mr. Yuan faces up to 20 years with a fine of up to $1 million.
News of Operation Gatekeeper comes one day after President Trump announced that Nvidia would be allowed to sell its advanced H200 chips to “approved customers” in China.
The U.S. will receive 25% of the proceeds from the Chinese sales, according to Mr. Trump’s announcement.
“The Department of Commerce is finalizing the details, and the same approach will apply to AMD, Intel, and other GREAT American Companies,” Mr. Trump wrote on Truth Social.
The deal comes as China works to dominate in the AI field, despite rampant competition in the U.S.
Nvidia clarified this week that the H200 chip is a step up from the H20 chip already being sold in China, but it’s not its most powerful technology.
“Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America,” an Nvidia spokesperson said.
