Washington | US federal authorities have dismantled a large-scale, clandestine operation that illegally exported advanced Nvidia artificial-intelligence chips worth more than ₹1,333 crore to China and other restricted destinations. The smuggling network, exposed under “Operation Gatekeeper,” relied on shell companies, falsified export documents and covert logistics channels to bypass stringent US export controls on sensitive AI technology.
The investigation has led to multiple arrests, the seizure of hundreds of crores worth of GPUs, and a guilty plea by a Texas-based technology firm, marking one of the most significant enforcement actions yet against illicit AI-chip trafficking.
Operation Gatekeeper Uncovers High-Value Smuggling Network
The US Attorney’s Office for the Southern District of Texas said investigators seized over ₹417 crore worth of Nvidia H100 and H200 GPUs during coordinated raids and inspections. Prosecutors stated that the chips were systematically misdeclared, routed through intermediaries, and exported using fabricated paperwork.
At the centre of the case is Alan Hao Hsu, owner of Hao Global LLC, based in Missouri City, Texas. Court filings show that between October 2024 and May 2025, Hsu knowingly smuggled and attempted to export restricted Nvidia AI processors while concealing their true destination. He received more than ₹417 crore in wire transfers originating from China, which authorities say funded the illegal operation.
Hsu pleaded guilty in October to charges related to smuggling and export-control violations.
Chips Re-Labelled, Buyers Fabricated to Evade Detection
Federal prosecutors have also charged Fanyue “Tom” Gong, a Chinese national residing in New York, and Benlin Yuan, a Canadian citizen based in Ontario, with conspiring to evade US export restrictions.
According to the indictment, Gong used straw purchasers to buy Nvidia chips in bulk while claiming they were destined for US-based or third-country customers. Warehouse workers allegedly removed Nvidia branding and re-labelled the processors as “SANDKYAN,” a fictitious company name, before declaring them as generic computer parts.
These altered shipments were then routed through logistics hubs to China and Hong Kong, avoiding regulatory red flags.
Misleading Inspectors and False Cover Stories
Investigators allege that Benlin Yuan, who served as CEO of the US subsidiary of a Beijing-based technology firm, played a key coordination role. He is accused of recruiting inspectors to obscure the true Chinese end-users of the shipments and of crafting false explanations to retrieve detained cargo from authorities.
Prosecutors further claim Yuan misled federal agents about shipment destinations and oversaw the handling and inspection of additional Nvidia chips on behalf of a Hong Kong–based logistics company, which allegedly acted as a conduit for the smuggling operation.
Advanced AI Chips Treated as National-Security Assets
The Nvidia H100 and H200 GPUs are among the most powerful AI processors globally, used in generative AI systems, large language models, and high-performance computing. Due to their potential military and intelligence applications, the US has imposed strict controls on their export to China and several other jurisdictions.
Officials warned that the unauthorised transfer of such chips could significantly bolster foreign military capabilities and erode the United States’ technological edge, making the case a serious national-security concern.
Charges, Sentencing and Penalties
According to prosecutors:
- Alan Hao Hsu faces up to 10 years in federal prison when sentenced on February 18.
- Hao Global LLC could face fines of up to twice the value of the illicit proceeds.
- Fanyue “Tom” Gong faces up to 10 years in prison for conspiracy to smuggle.
- Benlin Yuan could face up to 20 years in prison for conspiracy to violate the Export Control Reform Act.
Gong was arrested in New York on December 3, while Yuan was taken into custody in Virginia on November 28. Both remain detained pending further proceedings. Hsu has been released on bond until sentencing.
Joint Federal Investigation
The probe was conducted jointly by the Commerce Department’s Bureau of Industry and Security, Homeland Security Investigations, and the FBI. US officials stressed that while the evidence outlines a sophisticated and deliberate scheme, all defendants are presumed innocent until proven guilty in court.
Authorities said further enforcement actions are likely as the US steps up scrutiny of AI-chip supply chains to prevent sensitive technologies from reaching restricted foreign entities.
