US Prosecutors Say a California Businessman Routed More Than $300 Million of AI Servers to China via Malaysia and Singapore, an Allegation Not Yet Tested in Court

On 1 October 2026 the US Justice Department announced the arrest of Greg Lui, 38, of San Gabriel, California, on an indictment that accuses him of smuggling more than $300 million of export-controlled computer servers to China. A federal grand jury returned the three-count indictment on 29 September. Lui is presumed innocent, and every description of his conduct below is the government’s allegation, not a finding by a court.

The department’s press release says the servers contained US-made graphics processing units, or GPUs, the chips that train and run AI models. It says Lui bought them without the licences the Commerce Department requires.

What the indictment says Earthmade did

Lui owns Earthmade Computer Inc., a closely held technology company in the City of Industry, California. The release says that from 2023 to 2024 he and co-conspirators used it to buy high-end servers, ship them to Malaysia and Singapore, where no licence was needed, and have them sent on to China. It says Lui knew the real end users were in China, and that he and others gave US manufacturers false documents naming permitted buyers and destinations.

Two money figures appear in the release and they measure different things. The servers were worth more than $300 million. Between January and October 2024, Earthmade received more than $176 million from two Malaysia-based shipping companies.

The release walks through one deal in 2024. In January, Lui emailed a conspirator that a Malaysian transshipment company wanted 70 servers, and attached an export compliance form showing the company knew the US restrictions. Later that month he placed a purchase order with a US manufacturer for 27 servers costing about $7,614,000, which works out to $282,000 a server. They were shipped from Los Angeles to Kuala Lumpur. The packing list said the GPUs were export-controlled and could not go to China without a licence. In March 2024, the release says, a co-conspirator emailed a Malaysian government official that the 27 servers had been transshipped to a buyer in China.

The counts are conspiracy to violate the Export Control Reform Act and the Export Administration Regulations, outbound smuggling, and conspiracy to commit money laundering. The release gives maximums of 20 years for the export conspiracy, 20 for the money-laundering conspiracy and 10 for smuggling, if he is convicted on all counts. AFP reported a 50-year maximum, which is the sum of those three. The case was investigated by the Commerce Department’s Bureau of Industry and Security (BIS), the Defense Criminal Investigative Service and the FBI.

Why a stop in Malaysia is the whole trick

The release says Malaysia and Singapore required no licence for these servers. What matters under the rules is who ends up using them.

On 31 May 2026, BIS published guidance saying a licence is required to export advanced computing items to entities headquartered in Country Group D:5 or Macau, or whose ultimate parent company is, even when the entity itself is located elsewhere. Reuters reported the next day that the target was overseas subsidiaries of Chinese firms, including units in Malaysia.

The guidance gives the history. The requirement was first introduced on 17 November 2023. In January 2025 the AI Diffusion Rule, a Biden-era rule that set worldwide licence requirements, moved it into a new section of the regulations. In May 2025 BIS announced it would not enforce that rule’s new compliance requirements. BIS then received questions about whether the older requirement still applied to Chinese-headquartered buyers abroad. The guidance replies: “The answer is yes.”

A BIS spokesperson told Reuters the bureau was “clarifying export license requirements that have been in place since 2023”. An Nvidia official told Reuters the guidance changes nothing for the company, because Commerce had already imposed a licence requirement on it by letter. Reuters wrote that it was unclear how many chips were exported while the question stood open, and quoted one chip industry source putting the number at several hundred thousand. The guidance also says bona fide data centre operators need not stop using or servicing chips they already have, until BIS says otherwise.

Two earlier cases with the same shape

On 19 March 2026 prosecutors in Manhattan unsealed an indictment against three men: Yih-Shyan “Wally” Liaw, 71, of Fremont, California; Ruei-Tsang “Steven” Chang, 53, of Taiwan; and Ting-Wei “Willy” Sun, 44, of Taiwan. The Justice Department described Liaw as a co-founder and board member of a publicly traded US server manufacturer. CNN identified that company as Super Micro Computer and reported that the company is not named in the indictment.

The indictment alleges that a Southeast Asian company called “Company-1” bought about $2.5 billion of servers from the manufacturer in 2024 and 2025, and that at least about $510 million of them were diverted to China between late April and mid-May 2025. It also alleges that the defendants staged thousands of non-working “dummy” servers to deceive the manufacturer’s compliance team during an August 2025 audit, and that some were later staged for a Commerce Department inspection. Super Micro said it placed Liaw and Chang on leave, ended its relationship with Sun and is cooperating with investigators.

On 24 August 2026 the Keelung District Prosecutors Office in Taiwan indicted nine people, among them a senior partner manager at Nvidia’s Taiwan branch, surnamed Chang. Taiwan News reports the prosecutors allege false documents were used to get around internal sales controls on Supermicro servers carrying Nvidia B300 GPUs. Of 130 servers obtained, the indictment says 74 reached China, some by way of Indonesia, Japan and Hong Kong, and 56 were intercepted before export. Prosecutors are seeking sentences of 18 months to five years, with the five-year maximum for Chang and three others.

How much gets through, and who can say

Two research groups have tried to size the problem, with different methods and different limits.

Epoch AI, a research group that tracks AI hardware, estimated on 29 April 2026 that a median of 660,000 H100-equivalents, a yardstick that converts chips into the computing power of Nvidia’s H100, had been smuggled into China by the end of 2025. Its 90 per cent range runs from 290,000 to 1.6 million. Epoch’s own subtitle says the median would be roughly a third of China’s total compute. It combines two methods, one built on allegations in indictments and investigative reporting (median about 530,000) and one on the grey-market resale trade (median about 700,000).

Epoch lists its caveats on the same page. Most of the allegations behind its numbers are not yet proven in court, so they may overstate smuggling. Some diverted chips may never have reached China. Its detection-rate assumption is highly uncertain, with a 90 per cent range of 10 to 80 per cent. And Epoch says the roughly 300,000 H100-equivalents covered by publicly reported cases are likely a lower figure than the true total.

C4ADS, a research group, took a narrower approach in its 9 September 2026 report “Covert Compute”. It found that Chinese universities and research institutions bought at least 56 restricted Nvidia chips worth $1.7 million between July 2025 and January 2026. It also counted 50 export shipments of restricted Nvidia GPUs between 2023 and 2025, diverted through Vietnam, India and Malaysia to Hong Kong and China, worth about $13.4 million. It describes Megaspeed International, which Bloomberg and The New York Times reported as the largest Southeast Asian importer of Nvidia hardware, as having imported $4.6 billion between 2022 and 2025, with an ownership structure that “may have ties” to China. The report does not establish that link.

C4ADS counts only chips named in the records it found, and says its figures “almost certainly understate” the true volume. The two sets of figures count different things, so they cannot be added together or compared directly.

The licensed route Washington opened in January

The prosecutions sit alongside a licensing channel. On 13 January 2026 BIS announced that it would review applications to export Nvidia’s H200 and AMD’s MI325X chips, and similar chips, to China case by case, provided security requirements are met. The conditions include independent third-party testing in the United States and, for the Chinese buyer, export compliance procedures such as customer screening. BIS said the rule followed President Trump’s 8 December 2025 announcement allowing such shipments to approved customers.

The conduct described in the Lui release dates from 2023 and 2024, before that rule existed.

Where India appears in the record

India is one of the three transit countries in the C4ADS count. The report’s published summary treats the 50 shipments as one total across Vietnam, India and Malaysia, and names no Indian company.

India’s own GPU supply is partly a public programme. In February 2026 the National e-Governance Division reported 38,000 GPUs in the government’s existing capacity and 20,000 more to be added. tuput’s piece on India’s AI compute programme covers how that pool is used.

What the record does not yet show

The Justice Department release said Lui was expected to be arraigned on the afternoon of 1 October 2026. In the sources tuput reviewed, no plea or ruling had been reported by 8 October, and none of the three prosecutions described above had reached a verdict.