The Department of Justice (DOJ) on Monday announced it has shut down a China-linked smuggling scheme for advanced AI chips, minutes before President Donald Trump said he’s easing restrictions on exporting the critical tech to China.
The president announced in a Truth Social post on Monday the administration will allow U.S. chipmaker Nvidia to ship its advanced H200 artificial intelligence processors to approved buyers in China. Less than an hour earlier, the DOJ revealed its “Operation Gatekeeper” investigation had uncovered a “sophisticated smuggling network that threatens our Nation’s security by funneling cutting-edge AI technology to those who would use it against American interests.”
“These chips are the building blocks of AI superiority and are integral to modern military applications,” U.S. Attorney Nicholas J. Ganjei said in a statement. “The country that controls these chips will control AI technology; the country that controls AI technology will control the future.”
Between October 2024 and May 2025, Alan Hao Hsu and others exported or attempted to export at least $160 million worth of Nvidia’s H100 and H200 Tensor Core graphics processing units (GPU) to China and other restricted countries, according to the DOJ.
Hsu’s operation allegedly falsified shipping documents to disguise the GPUs and conceal their true destinations, including China. Investigators traced over $50 million in China-sourced funds that helped finance the scheme run by Hsu and his company, Hao Global.
Export controls on advanced AI chips have been hotly debated in recent months. In August, Trump rolled back controls on Nvidia’s H20 AI chips after CEO Jensen Huang argued that the H20 is an outdated chip for which China already has similar alternatives.
Unlike the H20 chips, however, the H200 is six times more powerful, and China is not expected to produce a comparable chip domestically until late 2027 at the earliest, according to a report released on Sunday by the non-partisan Institute for Progress.
A White House official told the Daily Caller News Foundation that exports would meet national security requirements, with chips shipped from Taiwan — where they are manufactured — to the U.S. for security inspection before being sent to China.
“The export system is rigorous and comprehensive,” an Nvidia spokesperson told the DCNF. “Even sales of older generation products on the secondary market are subject to strict scrutiny and review.”
“While millions of controlled GPUs are in service at businesses, homes, and schools, we will continue to work with the government and our customers to ensure that second-hand smuggling does not occur,” the spokesperson added.
Trump also said 25% of profits from the chips will go to the U.S., with a similar approach to be applied to Intel, AMD and other American chipmakers. He added that the details are still being finalized, but that President Xi Jinping of China has responded “positively.”
Meanwhile, Nvidia has consistently argued that allowing its chips to be exported to China and around the world will help establish American AI and technology as the global standard by fostering dependence on U.S. products.
Though the administration maintains the policy will protect U.S. national security and preserve American leadership in AI, some China watchers compare the move to China’s entry into the World Trade Organization in 2001, which helped the country rise as an economic superpower.
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