Two Southern California residents have been arrested on suspicion of knowingly exporting tens of millions of dollars’ worth of sensitive microchips used in artificial intelligence applications to China and have been charged with a felony, the Department of Justice announced on Tuesday.
Chuan Geng, a 28-year-old resident of Pasadena, and Shiwei Yang, a 28-year-old resident of El Monte, are charged with violating the Export Control Reform Act, according to a DOJ news release. The felony carries a maximum sentence of 20 years in federal prison. Geng surrendered to federal authorities on Saturday and Yang was arrested earlier that day.
A federal judge ordered Geng released on $250,000 bond at their initial appearance in court on Monday, according to the news release. A detention hearing for Yang was scheduled for Aug. 12. An arraignment is scheduled for Sept. 11. No pleas were taken.
Geng is a lawful permanent resident from China. Yang is a Chinese immigrant who overstayed her visa.
According to the complaint, the defendants knowingly exported sensitive technology from the U.S. to China for almost three years, including specialized computer parts known as graphic processing units used for advanced computing, through their El Monte-based company, ALX Solutions, Inc. without first obtaining the proper licensing or authorization from the U.S. Department of Commerce.
The defendants’ company was founded not too long after the Commerce Department started requiring licenses for the modern microchips that Yang and Geng are accused to have illegally exported, according to court records.
According to the news release, an analysis of various records shows that a December 2024 shipment and at least 20 previous shipments from ALX Solutions involved intermediary shipping and freight-forwarding companies in Singapore and Malaysia, sites that are commonly used as shipping transfer points to hide illegal shipments to China.
ALX Solutions has reportedly not received payments from the entities they supposedly exported goods through, according to the DOJ. The company instead received multiple payments from Hong Kong and China based companies, including a $1 million payment from a China-based company in January 2024.
In December 2024, ALX Solutions sent a shipment with a label falsely stating it was sending GPUs subject to federal laws and regulations, when in actuality the shipment contained GPUs requiring a license for export to China. Neither the defendants nor the company applied for or obtained a license from the Commerce Department.
The GPU chip, made by a manufacturer of high-performance AI chips, is one of the most powerful of its kind on the market, according to the World Economic Forum, and is “designed specifically for AI applications.”
Last week, law enforcement raided the ALX Solutions office and took phones belonging to the defendants that uncovered incriminating communications between Geng and Yang, including messaging about shipping export-controlled chips to China via Malaysia to dodge U.S. export laws, according to the news release.