Federal agents in LA, yeah, they supposedly broke open this whole smuggling thing. Apparently, a couple of young folks were moving millions in fancy graphics processors to China. I mean, imagine doing that from some tiny strip-mall office in El Monte, right?
So, here’s the deal. Court papers (like, just unsealed) show this company called ALX Solutions Inc. pops up right after the U.S. decided to clamp down on chip exports—late 2022 maybe? Anyway, they managed 21 shipments out in about 20 months. They’d send stuff through places like Singapore, calling them simple “video cards.” But then, surprise! Some routine check turned up crates with hot GPUs, marked as “computer parts.” Classic.
And, bank transfers? There’s this one buyer from Hong Kong dropping a cool million upfront. Then, random smaller amounts from mainlands, probably defense guys. Meanwhile, there are these Signal chats where one co-founder, Chuan Geng, tells Shiwei Yang to keep things secretive—like, “cut up orders, use different forwarders, switch labels if needed.” Seriously cloak-and-dagger stuff.
The whole operation hinges on a regulation from October 2022—restricted China from getting their hands on chips unless they had this fancy Commerce license. Why? Because these chips, with about 600 gigabytes per second bandwidth, are perfect for military AI. So yeah, super specific.
And, reading the affidavit? Total spy novel vibes. A pallet gets mislabelled, customs at Long Beach find it in December. They trace serial numbers back to Nvidia, and next thing you know, there’s a nighttime watch on a van leading to ALX’s warehouse. Agents find empty trays for GPUs worth about $25 million, ready to head to some startup AI firm in Shenzhen.
Geng turns himself in real calm. Yang, though? Caught with a one-way ticket at LAX. Geng’s out on a $250K bond, but Yang’s stuck in custody, waiting for a hearing. Both could face 20 years, thanks to the Export Control Reform Act.
The FBI called it “transshipment with a modern twist,” all while the BIS is looking into more penalties and maybe a lifetime export ban. Oh, and by the way, Geng was some finance guy for a failed e-commerce biz, while Yang did parcel forwarding for sneaker folks. They have no tech background, which apparently backs up the claim that ALX was just about moving these chips to China.
Prosecutors? They still need a grand jury for indictment. The defense hints they’ll argue that the chips didn’t quite make the banned cut when bought. Get ready for experts debating bandwidth and firmware. Trial could hit by spring 2026—plus, we might get a peek at how the U.S. plans to tackle this silicon smuggling in the AI age.
Source: Justice Department (kind of where it all came from).
