Two Southern California residents have been arrested and face federal criminal charges for allegedly illegally sending “tens of millions of dollars’ worth of sensitive microchips used in artificial intelligence (AI) applications” to China.
“Chuan Geng, 28, of Pasadena, and Shiwei Yang, 28, of El Monte, are charged with violating the Export Control Reform Act, a felony that carries a statutory maximum sentence of 20 years in federal prison,” the U.S. Department of Justice said in a news release.
From 2022 to last month, the pair sent graphic processing units, which the DOJ describes as “specialized computer parts used for modern computing,” to Singapore and Malaysia through their El Monte-based company ALX Solutions Inc.
Those two countries are “commonly are used as transshipment points to conceal illegal shipments to China,” and the payments received by ALX Solutions came not from the purported recipients of the chips, but from “companies based in Hong Kong and China, including a $1 million payment from a China-based company in January 2024,” the DOJ said.
Shipping these chips, which the DOJ describes as “the most powerful GPU chip on the market” designed for use in “self-driving cars, medical diagnosis systems, and other AI-powered applications,” to China would require special approval from the U.S. Department of Commerce, permission that the DOJ said was never sought or granted.
In fact, prosecutors allege Geng and Yang intentionally tried to skirt that requirement.
“Last week, law enforcement searched ALX Solutions’ office and seized the phones belonging to Geng and Yang that revealed incriminating communications between the defendants, including communications about shipping export-controlled chips to China through Malaysia to evade U.S. export laws,” the release said.
Geng, a legal permanent resident, was released on $250,000 bond. Yang, who overstayed her visa, has a detention hearing set for Aug. 12.
Both are scheduled to be arraigned on Sept. 11.
