Op‑ed: chip smuggling undermines export controls

Federal prosecutors have charged six men in three weeks with smuggling billions of dollars’ worth of artificial intelligence chips to China, undercutting a central U.S. export-control strategy. (cyberscoop.com) The April 15 CyberScoop op-ed by Foundation for Defense of Democracies fellow Jack Burnham points to a March case involving Super Micro Computer personnel accused of routing about $2.5 billion in chips to Chinese customers through Taiwan and other sites in Southeast Asia. It also cites a separate Justice Department case in which Alan Hao Hsu and Hao Global admitted exporting or trying to export at least $160 million in Nvidia H100 and H200 chips between October 2024 and May 2025. (cyberscoop.com) (justice.gov) Advanced artificial intelligence chips are the processors used to train and run large models, and Washington has spent the past three years trying to keep the fastest versions out of China. On March 25, 2025, the Commerce Department added 80 entities to the Entity List, including 12 tied to advanced artificial intelligence, supercomputing, and high-performance chips for China-based end users with military links. (bis.gov) (federalregister.gov) The op-ed argues the enforcement side has not kept pace with the policy side. A June 2025 report from the Center for a New American Security said the Bureau of Industry and Security’s enforcement budget had fallen in real terms even as the agency took on broader Russia and China controls after 2022. (cyberscoop.com) (cnas.org) That same Center for a New American Security report estimated smuggling to China in 2024 could have ranged from 10,000 to several hundred thousand chips, with a median estimate of about 140,000. The authors said Chinese resellers described overseas shell companies, mislabeled shipments, and online listings that together implied stockpiles of roughly 100,000 Nvidia H100 chips by December 2024. (cnas.org) Other reporting points in the same direction. The Information reported in 2025 that chip smuggling into China had grown from suitcase-scale diversions into a multinational business using shell companies and concealed shipments, with some single orders topping $100 million. (sopawards.com) Singapore’s March 2025 server-fraud case added another route. Prosecutors there told a court that transactions totaled about $390 million and involved servers from Dell and Super Micro that were allegedly misdirected through Singapore to Malaysia; local and international reporting said investigators were examining whether the servers carried Nvidia chips. (cnbc.com) (channelnewsasia.com) Nvidia has publicly pushed back on some diversion claims. CyberScoop notes that Chief Executive Jensen Huang said in 2025 there was “no evidence” of artificial intelligence chip diversion, while federal prosecutors later described multiple smuggling schemes in court filings. (cyberscoop.com) (justice.gov) China, for its part, has condemned the widening U.S. blacklist. After the March 2025 Entity List expansion, China’s foreign ministry said it “strongly condemns” the restrictions and urged Washington to stop “generalizing national security,” according to Reuters reporting carried by CNBC. (cnbc.com) The through line in Burnham’s argument is that export controls are only as strong as the investigators, customs officers, and prosecutors behind them. The recent indictments show the United States is finding some of the networks, but they also show how much business may already have moved beyond the airport gate and onto the factory floor. (cyberscoop.com)