US govt alleges S'pore & M'sia used as transit stops in illegal shipping of microchips to China

Two Chinese nationals have been arrested in California, U.S..

They are alleged to have exported tens of millions of dollars worth of sensitive microchips used in artificial intelligence (AI) applications, including Nvidia H100s, to China via Singapore and Malaysia.

According to the U.S. Department of Justice (DOJ), Yang Shiwei, 28, from El Monte, California, was arrested on Aug. 2.

Geng Chuan, 28, from Pasadena, California, surrendered to federal authorities later on the same day.

Both of them are charged with violating the Export Control Reform Act.

If convicted, they can face up to 20 years imprisonment, a fine of up to US$1 million (around S$1.3 million), or both.

Allegedly exported sensitive technology for almost 3 years

Citing an affidavit filed with the complaint, the DOJ revealed that the defendants "knowingly and wilfully exported from the U.S. to China sensitive technology" without the required licences from the U.S. Department of Commerce from October 2022 to July 2025.

Some of the sensitive technology smuggled includes graphic processing units (GPUs), which are specialised computer parts used for modern computing.

The defendants exported the technology to China via their El Monte-based company, ALX Solutions Inc.

According to the complaint, the company was founded after the U.S Department of Commerce made it compulsory to have licences for the advanced microchips the defendants allegedly smuggled.

DOJ stated Malaysia and Singapore are common transshipment points to "conceal illegal shipments" to China

Further investigation revealed that more than 20 shipments by ALX Solutions were sent to shipping and freight-forwarding companies in Singapore and Malaysia, which the DOJ stated are commonly used as transshipment points to conceal illegal shipments to China.

ALX Solutions did not receive any payments from the entities to which they purportedly exported goods.

Instead, they received a US$1 million (around S$1.3 million) payment from a China-based company in January 2024, as well as several payments from China and Hong Kong-based companies.

Allegedly smuggled Nvidia H100s

The AI chips allegedly smuggled by the defendants included Nvidia H100s.

According to Reuters, Nvidia H100s are advanced chips that can be used to train large language models and many other applications.

From at least August 2023 to July 2024, ALX Solutions bought over 200 Nvidia H100 chips from Super Micro Computer, a California-based information technology company, and claimed that they were for customers in Singapore and Japan, Reuters reported.

In a 2023 invoice, which was valued at almost US$29 million (around S$37 million), ALX Solutions supposedly exported chips to a customer in Singapore.

However, a U.S. export control officer in Singapore could not verify if the chips had arrived in the country and the company named did not exist at the listed location.

Investigations still ongoing

According to the DOJ, the U.S. Department of Commerce's Bureau of Industry and Security and the Federal Bureau of Investigation (FBI) are in the midst of investigating the case.

The defendants appeared in a federal court in Los Angeles, U.S. on Aug. 4, Reuters reported.

Geng, who is a permanent resident, was released on US$250,000 (around S$322,000) bond but Yang, who overstayed her visa, has a detention hearing on Aug. 12.

Top photo via Nvidia