Okay, so, imagine this: federal agents over in Los Angeles, not your typical Hollywood scene, have apparently busted open some kind of smuggling ring — we’re talking about millions in fancy graphics processors heading to China. The kind of high-tech gear you’d use for all sorts of AI magic, I guess. Anyway, the culprits, if you can call them that, are these two young folks. Barely out of their teens, running this gig from some, like, nondescript office in a random strip mall in El Monte. Yeah, I know. Unreal, right?
So, the paperwork from the court, which apparently spilled the beans Tuesday, tells this wild tale of ALX Solutions Inc. springing up just when Washington was laying down tighter chip export rules in late 2022. What a coincidence, huh? Over a year and a bit, they managed to get 21 shipments out, usually going through places like Singapore or Malaysia. The trick? Labeling these hot items as just regular video cards. I mean, who’d question that? Until a random check tore the curtain down — custom scanners showed those crates were bursting with today’s top accelerators. Just marked as “computer parts” though. Slick or just dumb luck?
The bank records are another circus. One big fish in Hong Kong sent a cool million upfront; other small fry from mainland companies, likely defense-linked, followed suit with lesser deposits. And, get this, they even nabbed some Signal app chats where the co-founder, Chuan Geng, was basically telling Shiwei Yang how to dodge the heat, like, slice orders up, mix up the forwarders, change labels when questioned. Sounds kinda movie-esque, right?
All this hinges on some Bureau of Industry and Security rule from October 2022. Essentially, China can’t access certain chips unless you’ve got a special export license. The rule focuses on chips having at least 600 gigabytes per second of interconnect bandwidth. The kind that speeds up military AI work. Heavy stuff.
And the spy drama continues. You’ve got a pallet with the wrong label caught by customs at Long Beach last December, a serial number chase leading to Nvidia’s inner circle, a midnight tail on a delivery van from the port back to ALX’s, I’m guessing, quite rented warehouse. Officers walked in with a warrant and found tons — and I mean tons — of empty anti-static trays. Like roughly a thousand snazzy GPUs worth $25 million and packing slips headed for some AI startup in Shenzhen. Just wow.
Geng, who’s legally cool in the U.S., gave himself up without a hitch. Yang, though, with his expired student visa since 2020, was snagged at LAX clutching a one-way to Taipei. Geng’s out on a quarter-million-dollar bond, but Yang’s still locked up, waiting for his day in court this August. They’re both tagged with charges under the Export Control Reform Act, meaning a potential two-decade stay in the slammer if things go poorly for them.
It’s the Justice Department’s Counterintelligence and Export Control Section teaming up with LA’s U.S. Attorney’s Office taking this one to court. The FBI’s calling it “classic transshipment” jazzed up for the 21st century, though BIS is gunning for civil penalties and possibly a forever export ban.
Digging into public records, Geng apparently did some money management stint for an online business that shut down over taxes, and Yang was into a parcel-forwarding thing in LA catering to, uh, fashionable sneaker enthusiasts abroad. Not exactly tech whizzes, which kinda backs up the claim ALX was just there to push embargoed tech into China’s, uh, thirsty accelerator scene.
But wait, there’s more. Prosecutors need a grand jury to rubber-stamp an indictment, and the defense looks ready to argue that the chips slipped just beneath the Commerce’s performance cutoff when bought. Cue the bandwidth and firmware debate. If this trial gets rolling by spring 2026, it could give us a raw glimpse into how Washington plans to handle silicon smuggling in our AI-crazed times.
