The US Department of Justice stated on Tuesday that two Chinese citizens have been arrested in California and are facing federal criminal charges for allegedly intending to illegally export sensitive microchips for artificial intelligence (AI) applications worth tens of millions of dollars to the Chinese Communist Party (CCP), with a maximum sentence of 20 years imprisonment under the law.
Shiwei Yang, a 28-year-old resident of El Monte, was arrested last Saturday, while Chuan Geng, a 28-year-old resident of Pasadena, later surrendered to federal authorities. The Department of Justice has charged both individuals with violations of the US Export Control Reform Act.
Furthermore, Yang is also an illegal immigrant with an expired visa, while Geng holds lawful permanent resident status in the United States. On Monday night, the two appeared in court for the first time at the US District Court in Los Angeles. A federal magistrate has granted Geng bail of $250,000 and scheduled Yang for a detention hearing on August 12.
According to sworn statements submitted with the complaint, from October 2022 to July 2025, the defendants knowingly exported sensitive technology from the United States to China without obtaining the required permits or authorizations from the US Department of Commerce through their company ALX Solutions Inc. located in El Monte. This included illegally exporting crucial hardware components, such as Graphics Processing Units (GPUs), from modern computer systems.
The complaint states that ALX Solutions Inc. was established shortly after the US Department of Commerce began requiring licenses for advanced microchips.
After investigating export records, business records, and the company’s website, the US authorities discovered that ALX Solutions had shipped a batch of goods in December 2024 and at least 20 previous batches to transport and freight forwarding companies in Singapore and Malaysia for transshipment to China to conceal the illegal destination.
ALX Solutions did not receive payments from the purported buyer companies listed on the shipping invoices but instead received payments from multiple companies in Hong Kong and China, including a $1 million payment from a Chinese company in January 2024.
In December 2024, ALX Solutions falsely labeled a shipment as GPUs not subject to federal laws and regulations. In actuality, the shipment contained GPU chips that required export licenses to be sent to China. The defendants and their company failed to declare or obtain the necessary permits from the Department of Commerce.
According to the complaint and public information, the chips illegally exported by the defendants were manufactured by a high-performance AI chip maker and are considered the “most powerful GPU chips on the market” designed specifically for AI applications like developing autonomous driving cars, medical diagnostic systems, and other AI uses.
Last week, law enforcement officials searched the office of ALX Solutions and seized the cell phones of Geng and Yang, uncovering communications between the two containing discussions on how to evade US regulatory laws and transport export-controlled chips to China via Malaysia.
The case is still under further investigation. Earlier this year, the US government tightened controls on advanced AI processors and chips exported to China, issuing new export license requirements.
Analysts believe that the Trump administration’s strict enforcement of regulatory loopholes is due to its intolerance of the CCP exploiting advanced US technology to threaten US security and global democracy and civilization.