Alleged smuggling of AI chips into China leads to US calls for chip tracking

The US Justice Department has charged four people in connection with a scheme to illegally export Nvidia AI chips to China, prompting a key House Republican on Thursday to urgently introduce a chip tracking bill.

“China recognizes the superiority of American AI innovation and will do whatever it takes to catch up,” said John Moolenaar, chairman of the US House Select Committee on China. “That’s why the bipartisan Chip Security Act is urgently needed.”

The legislation, which Moolenaar introduced in May and has 30 co-sponsors, would require location verification for chips, make it mandatory for chipmakers to report and share information about potential misuse, and look at additional ways to prevent U.S. chips from ending up in the wrong hands.

The case highlights the challenges Washington faces in enforcing its sweeping restrictions on high-tech exports to China, which are intended to hinder Beijing’s military development and keep the U.S. ahead in technology. China has criticized U.S. export restrictions as part of a campaign to weaponize economic and trade issues.

The indictment, which the U.S. Department of Justice announced Thursday, accuses two U.S. citizens and two Chinese nationals of conspiring to export Nvidia GPUs to China without the required licenses. The defendants allegedly drafted false contracts and provided false documentation to ship the chips to third countries, knowing they were destined for China.

According to the indictment, they then exported 400 Nvidia A100 GPUs to China via Malaysia between October 2024 and January 2025. Law enforcement officials have halted attempts to export 10 Hewlett-Packard supercomputers with Nvidia H100 GPUs and 50 discrete Nvidia H200 GPUs through Thailand, the U.S. Department of Justice said.

In the Florida case, the conspiracy involved using a Tampa company as a front to purchase and export chips, and nearly $4 million in wire transfers from China to finance the scheme, the Justice Department said.

An attorney for one defendant declined to comment and an attorney for a second defendant did not immediately respond to a request for comment. The other defendants could not immediately be reached.