Key points
- A California executive faces three federal charges
- Prosecutors say the servers went through Malaysia
- Nvidia isn't accused of wrongdoing
Greg Lui, owner of California-based Earthmade Computer Inc., was arrested on Thursday. Prosecutors accuse the 38-year-old of smuggling more than $300 million worth of servers containing Nvidia (NVDA) chips to China, the Justice Department said.
The indictment says the servers held Nvidia A100 and H100 data center chips, along with GeForce RTX 4090 and RTX 5090 graphics cards. All of them need a Commerce Department license to be shipped to China.
What does the indictment say?
Prosecutors say Lui bought the servers from three U.S. server makers by claiming they were going to buyers in countries that don't require a license. The indictment doesn't name the manufacturers, but it lists a sales manager at one of them as an unindicted co-conspirator.
The servers went to Malaysia and Singapore first. From there, they were re-exported to China, according to the indictment. Earthmade received more than $80 million from one Malaysian company and $96 million from another between January and October 2024. The first company was mainly in the lumber, plywood and wood panel business. The indictment calls the second a front company.
On Jan. 30, 2024, Lui placed an order for 27 servers with Nvidia H100 chips for about $7.6 million. They were shipped from Los Angeles to Kuala Lumpur the next day. On March 12, a co-conspirator emailed a Malaysian government official that the 27 servers had been transshipped to the Chinese buyer, which the indictment describes as an industrial company in Hangzhou.
In June 2024, 92 more servers were flown from San Francisco to Kuala Lumpur and then on to Hong Kong, with the Hangzhou company listed as the consignee. In a separate July 2024 order for 100 servers with H100 chips, prosecutors say Lui submitted paperwork naming a "Jackie Lui" as chief executive of the listed buyer, Topmost. The indictment also says he bought another person's identity documents in 2021 and used that identity in the scheme.
What charges does Lui face?
A federal grand jury returned the three-count indictment on Sept. 29. Lui is charged with conspiring to violate the Export Control Reform Act, outbound smuggling and conspiring to launder money. The conspiracy and money laundering counts each carry up to 20 years in prison, and the smuggling count carries up to 10.
The Justice Department's release describes the scheme as running from 2023 to 2024. The indictment says the export conspiracy continued until at least Aug. 12, 2026.
"This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China," said Bill Essayli, the first assistant U.S. attorney for the Central District of California.
Lui "allegedly sold the Chinese government hundreds of millions of dollars' worth of American Super Intelligence technology," said Roman Rozhavsky, assistant director of the FBI's Counterintelligence and Espionage Division. The indictment identifies the buyer as a Chinese industrial company, without describing it as a government entity.
Prosecutors argued in a court filing that Lui should be held without bail because of a "serious risk" he would flee, Bloomberg reported. An indictment is only an allegation, and Lui is presumed innocent unless proven guilty.
Is Nvidia accused of wrongdoing?
No. The indictment targets Lui's alleged purchases, export arrangements and money transfers. It doesn't accuse Nvidia of participating in the scheme.
Nvidia shares were up 1.9% at $235.31 as of 11:09 a.m. ET on Friday, after hitting a record intraday high earlier in the session.
