4 People Indicted in Alleged Conspiracy to Smuggle Supercomputers and Nvidia Chips to China

Stern said text messages obtained by authorities show Li boasting about how his father “had engaged in similar business on behalf of the Chinese Communist Party.” Stern alleged the messages also show Li, who works at a hardware distribution company, was aware through news articles he shared that the Nvidia chips were subject to export controls. “He explained that his father had ways to import them,” Stern said, again citing Li’s text messages.

Stern told the court that Li “did admit to various facts” during questioning by federal agents on Wednesday that implicated him.

The defendants face various charges related to violating export control laws and up to 20 years in prison.

Ho and Raymond did not immediately respond to requests for comment sent to LinkedIn accounts purportedly belonging to them. Public defenders for Chen and Li declined to comment.

Nvidia spokesperson John Rizzo said in a statement that “even small sales of older generation products on the secondary market are subject to strict scrutiny and review” and that “trying to cobble together datacenters from smuggled products is a nonstarter, both technically and economically.”

Corvex, an AI cloud computing business Raymond consulted for, said in a statement that it had rescinded a job offer for him to join the company full-time and that it had no connection to the alleged wrongdoing.

Earlier this year, the US Department of Commerce was reportedly considering restricting the sale of advanced chips to Malaysia and Thailand in an effort to curb chip smuggling, but the regulations have yet to be finalized. The Commerce Department did not immediately respond to a request for comment.

Magistrate Judge Westmore ordered Li to hire an attorney because she said he had significant equity in a San Leandro, California, home and other assets, making him ineligible for a public defender. The magistrate also set a hearing for Tuesday to decide whether Li is a significant flight risk and should continue to be detained. He holds a US green card and Hong Kong citizenship.

Li, wearing glasses, flipflops, and a black windbreaker, nodded in response to some of Westmore’s statements but did not speak. Kaitlyn Fryzek, his temporary public defender, said Li is planning to marry a US citizen. “His incentive is to stay and get married to his fiancée,” Fryzek said.