MediumV Technology Geopolitics & AI1 October 2026, Thursday
Californian charged with smuggling $300 million of Nvidia servers to China
US prosecutors have charged Greg Lui, the 38-year-old owner of Earthmade Computer, with sending export-controlled Nvidia servers worth about $300 million to China via Malaysia and Singapore. Lui appeared in court in Los Angeles on 1 October.
According to the indictment cited by Bloomberg on 3 October, Lui faces 3 charges: attempting to violate export control law, smuggling goods out of the country and attempted money laundering. The case was filed in the Central District of California under number 26-cr-00618. One example in the file covers 27 servers with H100 processors worth about $7.6 million. The investigation was run by 3 agencies: the FBI, the Commerce Department's export enforcement arm (BIS) and the Defense Department's criminal investigative service.
According to The Register on 2 October, prosecutors allege Lui received more than $176 million in payments from 2 Malaysian transshipment companies. Court documents trace 92 servers that left San Francisco airport for Kuala Lumpur and were routed from there to buyers in Hong Kong. According to the indictment, the shipments included RTX 4090 and RTX 5090 cards alongside A100 and H100 data centre processors. Forged documents allegedly listed a front company registered in California, Topmost, as the buyer.
The sources diverge on 2 points. Bloomberg writes that the scheme ran in 2023–2024 and that the maximum sentence is 20 years. The Register extends the period from October 2023 to 12 August 2026 and puts the combined maximum for the charges at 50 years. After Lui's first hearing on 1 October, Nvidia said smuggling was 'a losing proposition' and that it had cooperated with law enforcement.
Talay assessment
Bottom line
The case shows once again that the real gap in US export controls is the Southeast Asian transshipment route. The allegation that 92 servers reached Hong Kong via Kuala Lumpur suggests controls break down not at the point of sale but at end-user verification. The most likely outcome is that Washington tightens licensing and inspection requirements for Malaysia and Singapore.
Likely effects
- Southeast Asian data centre investmentNegative1–6 months
Allegations of transshipment via Malaysia and Singapore raise the risk of extra end-user checks on AI servers bound for those countries.
- China's access to computeUncertainWeeks
Every network caught raises grey-market costs, but a single $300 million case is small next to China's overall demand.
- Chip exports to TürkiyeNegative1–6 months
If the US widens general licence requirements against transshipment hubs, the paperwork burden could also grow for advanced AI chips bound for intermediate countries such as Türkiye.
Possibilities, ranked
- 1Tighter scrutiny of transshipment hubs55%
BIS publishes new Entity List designations or warnings aimed at intermediaries in Malaysia and Singapore.
Watch: BIS adding Malaysia- or Singapore-based companies to the list in the Federal Register
- 2The case stays isolated30%
Prosecution continues but no further regulation follows; the grey market shifts to new routes.
Watch: No additional defendants or new indictment in the case
- 3The network widens15%
Lui's cooperation exposes new intermediary firms and Chinese buyers.
Watch: A Justice Department announcement of new arrests linked to the case
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Alleged value of shipments▼ ≈$300m
- Payments from Malaysian intermediaries▼ $176m+
- Servers documented▼ 92