Los Angeles: Two Chinese nationals, Chuan Geng, 28, of Pasadena, and Shiwei Yang, 28, of El Monte, have been arrested under a federal criminal complaint accusing them of exporting tens of millions of dollars’ worth of sensitive microchips to China. These microchips are used in artificial intelligence (AI) applications. The complaint alleges a violation of the Export Control Reform Act, which carries a maximum penalty of 20 years in prison. Geng surrendered to federal authorities on Saturday, while Yang was arrested earlier that day.
According to United States Department of Justice, at their initial court appearance in Los Angeles, a federal magistrate judge ordered Geng released on a $250,000 bond, with a detention hearing for Yang scheduled for August 12. Their arraignment is set for September 11, and no pleas were taken during the Monday appearance. The company involved, ALX Solutions, reportedly received multiple payments from Hong Kong and China-based companies, including a $1 million payment from a Chinese company in January 2024.
In December 2024, ALX Solutions allegedly shipped GPUs with false labeling, claiming compliance with federal laws. These GPUs required an export license to China, which neither the defendants nor their company applied for or obtained. The microchips in question, known as the most powerful GPU chip on the market, are integral to developing AI applications, such as self-driving cars and medical diagnosis systems.
Law enforcement searched ALX Solutions’ office last week, seizing phones that revealed incriminating communications between the defendants. These communications included discussions about exporting chips to China via Malaysia to circumvent U.S. export laws. The announcement was made by Assistant Attorney General for National Security John A. Eisenberg, U.S. Attorney Bilal A. Essayli for the Central District of California, and Assistant Director Roman Rozhavsky of the FBI Counterintelligence Division.
The U.S. Department of Commerce’s Bureau of Industry and Security, alongside the FBI, is investigating the case. Assistant U.S. Attorneys Colin S. Scott, Joseph Guzman, and Jenna Long are prosecuting the case with assistance from Trial Attorney Chantelle Dial from the National Security Division’s Counterintelligence and Export Control Section. It is important to note that a criminal complaint is an allegation and all defendants are presumed innocent until proven guilty in a court of law.