2 LA residents charged with illegally exporting $10M in AI chips to China

Two Los Angeles County residents face federal charges for allegedly illegally exporting tens of millions of dollars’ worth of artificial intelligence microchips to China over nearly three years. The case highlights ongoing U.S. efforts to prevent sensitive AI technology from reaching China amid growing geopolitical tensions over semiconductor exports.

What you should know: Chuan Geng, 28, of Pasadena, and Shiwei Yang, 28, of El Monte, were arrested Saturday for allegedly violating federal export controls through their company ALX Solutions Inc.

• Both are Chinese nationals, with Geng holding lawful permanent resident status and Yang having overstayed her visa.
• They operated an El Monte-based technology company specializing in high-powered central processing units and graphics processing units for AI applications.
• The microchips they exported are capable of being used in AI development for self-driving cars and medical diagnosis systems.

The scheme: Federal prosecutors allege the pair “knowingly and willingly” circumvented export regulations by routing shipments through third-party countries to conceal their final destination.

• ALX Solutions was involved in at least 20 unlicensed or mislabeled chip shipments to China after the Commerce Department began requiring licenses for these “sensitive technologies.”
• Shipments went from the U.S. to freight-forwarding companies in Singapore and Malaysia, which prosecutors say are commonly used as transshipment points to hide illegal shipments to China.
• The company received payments from companies in Hong Kong and China that were not the stated purchasers of their goods.

Key evidence: Law enforcement seized two phones from the ALX Solutions office last week that allegedly contained “incriminating” communications about evading export laws.

• The communications specifically discussed shipping chips through Malaysia to circumvent federal regulations.
• Export and business records showed discrepancies between stated buyers and actual payment sources.
• The defendants falsely labeled GPUs as licensed despite never applying for or obtaining Commerce Department licenses.

Legal consequences: Both defendants are charged under the Export Control Reform Act, a 2018 law that strengthened federal controls on emerging technologies.

• Violations can carry a maximum sentence of 20 years in federal prison.
• Geng was released Monday on $250,000 bond, while Yang has a detention hearing scheduled for August 12.
• Arraignment for both is set for September 11.

Why this matters: The case represents the latest enforcement action in the U.S. government’s broader strategy to prevent China from accessing advanced semiconductor technology that could enhance its military capabilities or AI development programs.