U.S. arrests IT company CEO over $300 million Nvidia chip smuggling scheme to China
U.S. authorities have arrested 38-year-old Earthmade Computer CEO Greg Louie for allegedly organizing illegal shipments of servers containing Nvidia chips to China. According to the U.S. Department of Justice, more than $300 million worth of equipment passed through the alleged scheme.
According to a press release, investigators allege that Louie used falsified documents and logistics companies in Malaysia and Singapore to conceal the equipment's final destination. The shipments to China allegedly included servers equipped with Nvidia A100 and H100 accelerators subject to U.S. export restrictions.
The alleged scheme operated from October 2023 through August 2026. Law enforcement authorities cited emails and bank records that they say show the shipment routes and movement of funds.
Servers shipped through Malaysia and Singapore
One case involved an order for 70 servers containing export-restricted accelerators. Louie allegedly purchased 27 of them for about $7.6 million and listed Malaysia as their destination, although an accomplice later told a local official that all the equipment had been sent to China.
Another 92 servers were allegedly shipped through Singapore to Malaysia, then to Hong Kong and ultimately transferred to a company in Hangzhou, China, according to the FBI. In another case involving 100 servers equipped with Nvidia H100 chips worth more than $22 million, investigators found documents from an allegedly fictitious buyer.
Earthmade Computer allegedly received more than $176 million through the scheme in 2024 alone. Louie faces charges of conspiracy to violate export controls, smuggling and money laundering. The most serious charges carry prison sentences of up to 20 years.
Nvidia said identified cases of illegal diversion of its products to China account for less than 0.5% of shipments. U.S. officials and industry experts have pointed to potential gaps in customer screening, while the company disputes claims that it could have prevented some of the identified shipments.
Banks question Nvidia chips as reliable collateral
Meanwhile, Nvidia is seeking to expand the financial role of its AI accelerators by turning them into assets that data center operators can use as collateral for long-term loans. The approach could unlock additional financing for the rapid expansion of computing infrastructure.
Wall Street has shown interest in the model, but lenders are demanding additional safeguards before treating GPUs like long-term infrastructure assets. One of the key concerns is whether expensive hardware can retain its value throughout the life of a loan as new generations of AI chips develop rapidly.
Earlier, we reported that Nvidia expanded its share buyback program, increasing its authorization to $150 billion.
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