Two individuals from China have been apprehended for allegedly exporting AI chips from the United States to China without the necessary licenses. They are facing charges under the Export Control Reform Act, which carries a maximum penalty of 20 years in prison.

According to the US Department of Justice, Chuan Geng and Shiwei Yang are believed to have exported “tens of millions of dollars’ worth of sensitive microchips used in artificial intelligence (AI) applications” between October 2022 and July 2025. In recent developments, their phones were seized, revealing communications that hinted at attempts to circumvent US export laws by shipping from Malaysia to China.

The alleged operation was run through ALX Solutions Inc., based in California, where Geng is tasked with overseeing finances, while Yang serves as the secretary. The third purported member, identified as the CEO, remains unnamed. The company was allegedly established shortly after new licensing requirements for advanced microchips were instituted by the Commerce Department.

ALX Solutions reportedly sent these controlled components to Singapore and Malaysia, acting merely as transshipment points to disguise their delivery to China. The DOJ asserts that the firm received payments from Chinese and Hong Kong-based companies, including a substantial transaction of $1 million in January 2024 from a China-based entity.

Smuggling of chips is not a recent issue, as past smuggling attempts have employed unconventional means, revealing the increasing sophistication of such operations over recent years. Geng and Yang’s arraignments are scheduled for September 11, following a recent decision to release Geng on a $250,000 bond.