Founder Arrested for Smuggling AI Chips to China
Federal authorities charged Greg Lui with orchestrating a $300 million scheme to bypass export restrictions on advanced semiconductors.
Updated on Oct. 1, 2026 in Semiconductors
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Greg Lui, founder of City of Industry-based Earthmade Computers, was arrested by federal agents on charges of smuggling restricted AI processors to China. Lui allegedly funneled $300 million worth of hardware through intermediaries in Malaysia and Singapore to evade U.S. export controls.
Why it matters
The case highlights the ongoing challenges of enforcing export controls on high-performance compute hardware designed for AI. The scheme used complex transshipment routes to circumvent regulations intended to keep advanced technology out of restricted markets.
The operation moved servers containing high-performance processors manufactured by Nvidia Corp, which are subject to stringent U.S. export licensing requirements. Between January and October 2024 alone, Lui's firm received $176 million in payments from overseas shipping companies.
The players
Greg Lui
Founder of Earthmade Computers and a San Gabriel resident accused of orchestrating a large-scale international smuggling operation.
Earthmade Computers
A City of Industry-based technology firm allegedly used as a shell to procure and distribute restricted hardware.
Nvidia Corp
A leading designer of AI processors whose high-end server technology was the primary focus of the alleged smuggling activities.
The details
Lui allegedly utilized fake documentation to misrepresent the final destination of hardware shipments, ensuring they bypassed U.S. license requirements. By routing servers through Malaysia and Singapore, he obscured the supply chain before the technology was eventually re-exported to China. The scheme involved significant volume, including a January 2024 purchase of 27 servers valued at $7.6 million.
Timeline
2023-2024: Lui allegedly smuggled technology into China.
January 2024: Lui purchased 27 servers for $7.6 million.
January 2024 - October 2024: Earthmade received $176 million in payments.
September 30, 2026: Federal agents arrested Greg Lui.
The Tech Race
The arrest represents a federal enforcement action related to the Export Control Reform Act, which regulates the sale of sensitive AI hardware to prevent unauthorized technology transfers. This move signals an intensifying effort by U.S. regulators to close loopholes in the global semiconductor supply chain.
This enforcement action likely triggers increased scrutiny for companies handling high-end server components and transshipment logistics. Organizations in the semiconductor distribution space should expect more rigorous verification requirements for international export documentation.
The takeaway
Lui faces a potential maximum sentence of 50 years in prison if convicted on the three federal charges. Watch for future court proceedings to determine the scope of the supply chain evidence presented against Earthmade Computers.
Further reading
For broader context on current trade restrictions and hardware availability, review the latest updates on Semiconductors.
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