As White House moves to send AI chips to China, Trump\u2019s DOJ prosecutes chip smugglers | CyberScoop<\/title> <meta name=\"description\" content=\"Prosecutors called criminal schemes to route computer chips to China a threat to U.S. national security, while Democrats have criticized the White House\u2019s decision.\"> <link rel=\"canonical\" href=\"https:\/\/cyberscoop.com\/white-house-sends-ai-chips-to-china-trump-doj-prosecutes-chip-smugglers\/\"> <meta property=\"og:locale\" content=\"en_US\"> <meta property=\"og:type\" content=\"article\"> <meta property=\"og:title\" content=\"As White House moves to send AI chips to China, Trump\u2019s DOJ prosecutes chip smugglers\"> <meta property=\"og:description\" content=\"Prosecutors called criminal schemes to route computer chips to China a threat to U.S. national security, while Democrats have criticized the White House\u2019s decision.\"> <meta property=\"og:url\" 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class=\"single-article__header \" readability=\"25.512711864407\">\n<div class=\"single-article__header-content\" readability=\"34.894967177243\">\n<ul class=\"single-article__eyebrow\">\n<li class=\"single-article__category\"> <a class=\"single-article__category-link\" href=\"https:\/\/cyberscoop.com\/white-house-sends-ai-chips-to-china-trump-doj-prosecutes-chip-smugglers\/\"> <span>Government<\/span> <\/a> <\/li>\n<\/ul>\n<p> Prosecutors called criminal schemes to route computer chips to China a threat to U.S. national security, while Democrats have criticized the White House\u2019s decision. <\/p>\n<p>  <br \/>\n<audio id=\"audio-player\" src=\"https:\/\/wp-tts-cdn.api.scpnewsgrp.com\/cyberscoop\/87112\/english.openai.mp3\"><\/audio> <\/p>\n<div readability=\"11\">\n<div>\n<p>Listen to this article<\/p>\n<p>  <\/p>\n<p>0:00<\/p>\n<\/p><\/div>\n<p>  <\/p>\n<p> <span id=\"tts-tooltip\">Learn more.<\/span> <span> This feature uses an automated voice, which may result in occasional errors in pronunciation, tone, or sentiment. <\/span> <\/p>\n<\/div>\n<p>  <\/div>\n<div class=\"single-article__cover-wrap\">\n<figure class=\"single-article__cover\"> <img data-recalc-dims=\"1\" fetchpriority=\"high\" width=\"640\" height=\"426\" src=\"https:\/\/i0.wp.com\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers.jpg?resize=640%2C426&ssl=1\" class=\"single-article__cover-image wp-post-image\" alt decoding=\"async\" fetchpriority=\"high\" srcset=\"https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers-2.jpg 7481w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers-2.jpg?resize=300,200 300w, 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https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers-2.jpg?resize=252,168 252w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers-2.jpg?resize=506,337 506w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers-2.jpg?resize=1013,675 1013w, https:\/\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers-2.jpg?resize=1265,843 1265w\" sizes=\"(max-width: 1013px) 100vw, 1013px\"><figcaption> (Getty Images) <\/figcaption><\/figure>\n<\/p><\/div>\n<\/header>\n<div class=\"single-article__content\">\n<div class=\"single-article__content-inner has-drop-cap\"> <html readability=\"87.913677006292\"><body readability=\"178.27148784825\"><\/p>\n<p>As the Trump administration considers loosening restrictions on the sale of high-performance computer chips that power modern artificial intelligence systems to China, his Department of Justice continues to prosecute businesses and individuals who sell or divert these same technologies to companies based in China. <\/p>\n<p>On Monday, federal prosecutors announced that it had secured a guilty plea from a Chinese-American citizen Alan Hao Hsu and his company Hao Global for a multi-million-dollar scheme to funnel advanced AI computer chips to Chinese businesses.<\/p>\n<p>In affidavits, investigators at the Department of Commerce\u2019s Bureau of Industry and Security described the smuggled H100 and H200 chips as some of the most sensitive and controlled technologies under U.S. export laws. According to the <a href=\"https:\/\/www.documentcloud.org\/documents\/26367635-alan-hao-hsu-plea-agreement\/\">plea agreement<\/a>, his company sold NVIDIA chips totaling $160 million to Chinese businesses. <\/p>\n<p>According to a court documents obtained by CyberScoop, since at least Oct. 2024 through May 2025, Hsu and others used Hao Global to export, or attempt to export, more than 7,000 NVIDIA H100 and H200 Tensor Core GPUs that are used in many AI and high-performance computing systems. Prosecutors said these chips were designed \u201cto process massive amounts of data, advancing generative AI and large language models and scientific computing.\u201d<\/p>\n<div class=\"ad ad--inline_1 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<p>Hsu would receive business leads from companies in China looking to buy GPUs, and funding through shell companies and other transactions to purchase the chips under the auspice of legally reselling them to customers in the United States, Malaysia and Thailand. Instead, DOJ said those shipments were diverted to China and Hong Kong, and Hsu and his company allegedly falsified bills of lading \u2013 essentially a receipt of what goods were being transported \u2013 and loaded them up on boats bound for other countries.<\/p>\n<p>In February 2025, BIS investigators seized one shipment of GPU baseboards in Atlanta that had \u201cincorrect and misclassified shipping information.\u201d The <a href=\"https:\/\/www.documentcloud.org\/documents\/26367639-criminal-complaint-united-states-v-fanyue-gong\/\">criminal complaint<\/a> also names two other defendants: Fanyue Gong, a New York resident and owner of a Brooklyn-based technology company and Benlin Yuan, president of Virginia IT firm, as a part of the conspiracy.<\/p>\n<p>When federal agents visited a New Jersey warehouse managed by Gong\u2019s company, an undercover agent observed employees relabeling Nvidia GPUs with labels for a fake company named SANDKYAN, and one employee told investigators they received instructions from Gong in to relabel the boxes in an encrypted messaging app group chat and were paid in cash.<\/p>\n<p>Hsu reportedly received payment for the chips from Chinese sources through bank accounts in Thailand, Malaysia and Singapore.<\/p>\n<p>The plea agreement for Hsu, a naturalized U.S. citizen who lives in Fort Bend, Texas, notes that he has been informed his guilty plea could result in consequences for his immigration status, including potential denaturalization and deportation. <\/p>\n<p>It\u2019s the second such case brought forward in the last month by the Department of Justice alleging that individuals and businesses selling high performance GPUs to China were violating export controls and threatening national security.<\/p>\n<div class=\"ad ad--inline_1 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<p>Last month, DOJ announced <a href=\"https:\/\/www.justice.gov\/opa\/pr\/us-citizens-and-chinese-nationals-arrested-exporting-artificial-intelligence-technology\">similar charges<\/a> against four U.S. and Chinese nationals in Florida, Alabama and California for conspiracy, smuggling and money laundering. The group allegedly evaded export restrictions by sending NVIDIA GPUs to Malaysia and Thailand before routing them to China between 2023 and 2025.<\/p>\n<p>Prosecutors in the case said that preventing these chips from reaching China was a matter of \u201csafeguarding our country\u2019s national security.\u201d The individuals charged face lengthy jail sentences: the conspiracy and money laundering charges come with a maximum 20-year prison sentence, while smuggling carries a maximum of 10 years.<\/p>\n<p>As Caleb Withers, a research associate at the Center for a New American Security, noted in a <a href=\"https:\/\/www.cnas.org\/publications\/reports\/tipping-the-scales?utm_medium=email&utm_campaign=Event%20Emerging%20AI%20Capabilities%20and%20the%20Future%20of%20Cybersecurity%20Reminder&utm_content=Event%20Emerging%20AI%20Capabilities%20and%20the%20Future%20of%20Cybersecurity%20Reminder+Preview+CID_41e36d35d9affdf75d4f482874ac2e5f&utm_source=Campaign%20Monitor&utm_term=Tipping%20the%20Scales%20Emerging%20AI%20Capabilities%20and%20the%20Cyber%20Offense-Defense%20Balance\">report<\/a> on AI export controls, \u201csmuggling of cutting-edge chips is widespread, and Huawei and Semiconductor Manufacturing International Corporation (SMIC) have in some cases still been able to get their hands on advanced equipment integral to helping them advance their chip production capabilities.\u201d<\/p>\n<p>Withers also argues that the Bureau of Industry and Security suffers from \u201cchronic underresourcing\u201d and notes that a single shipment of the high-end chips the agency is charged with protecting cost more than their annual enforcement budget.<\/p>\n<p>But arguments by federal prosecutors that China\u2019s access to these chips would fundamentally undermine U.S. national security contrasted with President Trump\u2019s announcement the same day that he had personally informed Chinese President Xi Jinping that he would allow NVIDIA to sell the very same H200 chips to China and other countries. In doing so, he promised unspecified \u201cconditions\u201d that would protect U.S. national security.<\/p>\n<p>\u201cThe Department of Commerce is finalizing the details, and the same approach will apply to AMD, Intel and other GREAT American companies, Trump <a href=\"https:\/\/truthsocial.com\/@realDonaldTrump\/posts\/115686072737425841\">wrote<\/a> on Truth Social Monday.<\/p>\n<p>Democrats were quick to pounce on the decision, arguing that the move would harm U.S. companies that benefit from chip restrictions while simultaneously boosting industry for a geopolitical adversary in China. Eight Senate Democrats said in a statement that the H200 chips approved for sale by the Trump administration are \u201cvastly more capable than anything China can make\u201d and warned that \u201cgifting them to Beijing would squander America\u2019s primary advantage in the AI race.<\/p>\n<div class=\"ad ad--inline_1 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<p>\u201cChinese AI giant DeepSeek said as recently as last week that the lack of access to advanced American-designed AI chips is the single biggest impediment to its ability to compete with U.S. AI companies,\u201d the senators said. \u201cWith this decision, President Trump is poised to remove that barrier.\u201d<\/p>\n<p>Another Democrat, Sen. Mark Warner, D-Va., said he believes U.S. dominance in AI hardware will come down to whether U.S. or Chinese products influence the global supply chain and criticized the White House for its lack of strategic vision.<\/p>\n<p>\u201cUnfortunately, the Trump administration\u2019s haphazard and transactional approach to export policy demonstrates that it does not have any sort of coherent strategy for how we will compete with China, specifically as it relates to whose chips, tools, cloud infrastructure, and ecosystem will influence the most AI developers worldwide,\u201d said Warner in a statement.<\/p>\n<p>Earlier this year, a group of experts <a href=\"https:\/\/cyberscoop.com\/china-deepseek-export-controls-congress-i\/\">told Congress<\/a> that AI chip export controls were among the most effective tools in slowing down Chinese companies in the AI race. <\/p>\n<p>Some experts reached by CyberScoop said there was a crucial distinction between the DOJ\u2019s legal prosecution of companies who are knowingly breaking established laws and the Trump administration\u2019s policy shift around selling AI chips.<strong><\/strong><\/p>\n<p>\u201cThose businessmen allegedly violated export control laws, evaded licensing requirements, and engaged in smuggling,\u201d said Elly Rostoum, a senior fellow at the Center for European Policy Analysis and former National Security Council staffer. \u201cEven if the White House later decides to loosen restrictions, the DOJ still has an obligation to prosecute violations of the laws as they existed.\u201d<\/p>\n<p>Rostoum said federal prosecutors can\u2019t retroactively excuse criminal conduct because policy preferences shift in the White House, and that a legal market for H200 chips should still leave room for prosecuting bad actors who use illegal means to do the same thing.<\/p>\n<div class=\"ad ad--inline_1 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<p>\u201cCriminal smuggling operations that create a completely unmonitored black market where chips disappear into unknown end-uses with zero accountability,\u201d she said. \u201cEven if you support opening up some sales to China, you still want to prosecute smugglers because the black market undermines any attempt at strategic control.\u201d<\/p>\n<p>Chinese government officials, for their part, <a href=\"https:\/\/www.ft.com\/content\/c4e81a67-cd5b-48b4-9749-92ecf116313d\">reportedly<\/a> intend to put limits on how many domestic companies will be able to buy the chips as part of the country\u2019s goal of establishing self-sufficient technology markets. According to the Financial Times, citing anonymous sources, regulators in Beijing have been discussing ways to permit limited access to NVIDIA H200 chips, with buyers likely going through an approval process where they must justify why they can\u2019t purchase their chips from domestic providers.<\/p>\n<p><\/body> <\/p>\n<footer class=\"single-article__footer\" readability=\"3.1717495987159\">\n<div class=\"author-card\" readability=\"13\">\n<div class=\"author-card__avatar\">\n<figure class=\"author-card__image-wrap\"> <img data-recalc-dims=\"1\" decoding=\"async\" class=\"author-card__image\" src=\"https:\/\/i0.wp.com\/ddi.mohflo.net\/wp-content\/uploads\/2025\/12\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers-1.jpg?w=640&ssl=1\" alt=\"Derek B. Johnson\"> <\/figure>\n<\/p><\/div>\n<p><h4 class=\"author-card__name\">Written by Derek B. Johnson<\/h4>\n<p> Derek B. Johnson is a reporter at CyberScoop, where his beat includes cybersecurity, elections and the federal government. Prior to that, he has provided award-winning coverage of cybersecurity news across the public and private sectors for various publications since 2017. Derek has a bachelor\u2019s degree in print journalism from Hofstra University in New York and a master\u2019s degree in public policy from George Mason University in Virginia. <\/p>\n<\/p><\/div>\n<div class=\"single-article__tags-container\">\n<h4 class=\"single-article__tags-title\">In This Story<\/h4>\n<\/p><\/div>\n<\/footer>\n<p> <\/html><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"single-article__ads js-single-article-sidebar\">\n<div class=\"ad ad--sidebar js-single-article-sidebar-5 ad--rightrail_1 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<div class=\"ad ad--sidebar js-single-article-sidebar-4 ad--rightrail_2 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> <\/div>\n<\/div>\n<div class=\"ad ad--sidebar js-single-article-sidebar-3 ad--rightrail_3 \">\n<div class=\"ad__inner\"> <span class=\"screen-reader-text\">Advertisement<\/span> 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China,<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[235,384,4772,271,78,1930,3466,3002,302,117,5642,670,439],"tags":[236,388,4777,277,86,1940,3468,3019,306,119,5643,672,443],"class_list":["post-8195","post","type-post","status-publish","format-standard","hentry","category-ai","category-artificial-intelligence-ai","category-bureau-of-industry-and-security","category-china","category-cybersecurity","category-department-of-justice","category-dept-of-commerce","category-export-control","category-geopolitics","category-government","category-gpus","category-microchips","category-policy","tag-ai","tag-artificial-intelligence-ai","tag-bureau-of-industry-and-security","tag-china","tag-cybersecurity","tag-department-of-justice","tag-dept-of-commerce","tag-export-control","tag-geopolitics","tag-government","tag-gpus","tag-microchips","tag-policy"],"featured_image_urls":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","chromenews-featured":"","chromenews-large":"","chromenews-medium":""},"author_info":{"display_name":"Cyber 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{"id":8195,"date":"2025-12-10T15:42:56","date_gmt":"2025-12-10T21:42:56","guid":{"rendered":"https:\/\/cyberscoop.com\/?p=87112"},"modified":"2025-12-10T15:42:56","modified_gmt":"2025-12-10T21:42:56","slug":"as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers","status":"publish","type":"post","link":"https:\/\/ddi.mohflo.net\/index.php\/2025\/12\/10\/as-white-house-moves-to-send-ai-chips-to-china-trumps-doj-prosecutes-chip-smugglers\/","title":{"rendered":"As White House moves to send AI chips to China, Trump\u2019s DOJ prosecutes chip smugglers"},"content":{"rendered":"