‘Operation Gatekeeper’ Busts China-Linked Chip Smuggling Ring

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Two businessmen arrested as U.S. authorities uncover a vast trafficking network moving advanced Nvidia H100/H200 AI chips to China, Hong Kong and other restricted destinations.

By TRH World Desk

New Delhi, December 9, 2025 — U.S. authorities have dismantled a sophisticated China-linked smuggling network that illegally trafficked high-end Nvidia AI chips worth more than $50 million, in one of the largest export-control busts since restrictions tightened on advanced semiconductor shipments to China.

The investigation, known as “Operation Gatekeeper,” resulted in the arrest of two businessmen and guilty pleas from a Houston-based company and its owner for orchestrating large-scale smuggling of Nvidia’s restricted H100 and H200 Tensor Core GPUs—chips crucial to cutting-edge artificial intelligence and high-performance computing.

“This advantage isn’t free,” said Assistant Attorney General for National Security John A. Eisenberg, emphasising the U.S. government’s determination to protect its technological lead. “Our engineers and scientists have built these capabilities. We will vigorously enforce export-control laws to defend this edge.”

U.S. Attorney Nicholas J. Ganjei warned that the network posed a direct national-security threat. “These chips are the building blocks of AI superiority and integral to modern military applications. The country that controls AI will control the future.”

Guilty Pleas and $160 Million in Attempted Exports

According to newly unsealed documents, Alan Hao Hsu, 43, of Missouri City, Texas, and his company Hao Global LLC, pleaded guilty on Oct. 10 to smuggling and unlawful exports. Between October 2024 and May 2025, Hsu and associates attempted to export $160 million worth of restricted Nvidia H100/H200 GPUs.

The GPUs—critical for generative AI, LLMs, and advanced scientific computing—were misclassified, falsely labelled, and routed through shell buyers to hide their true destination. Investigators say Hsu received more than $50 million in China-origin wire transfers to finance the scheme.

The chips were eventually shipped to China, Hong Kong, and other restricted destinations, violating stringent U.S. export-control laws. Hsu faces up to 10 years in prison at sentencing on Feb. 18.

Two More Arrests: PRC Nationals in Virginia and New York

Two additional China-linked businessmen—Benlin Yuan, 58, and Fanyue “Tom” Gong, 43—were arrested in Virginia and New York on charges of conspiring to violate U.S. export laws.

Court filings allege a high-level operation involving straw purchasers, fake labels, falsified shipping manifests, and the covert rebranding of Nvidia GPUs as generic “computer parts.” Some GPUs were relabelled as products of a fictitious company named “SANDKYAN.”

Yuan allegedly coordinated inspections and instructed associates to conceal China as the final destination, while Gong allegedly supervised the removal of Nvidia identifiers before illegal export.

The probe—led by BIS, ICE-HSI and the FBI—remains active. Authorities emphasised that the defendants remain innocent until proven guilty.

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