Two Chinese nationals living in Los Angeles County have been arrested on federal charges alleging they were paid more than $1 million for illegally exporting to China advanced microchips used in artificial intelligence applications, officials announced Tuesday.
Chuan Geng, 28, of Pasadena, and Shiwei Yang, 28, of El Monte, are charged with violating the Export Control Reform Act, a felony carrying a possible sentence of up to 20 years behind bars, according to the U.S. Department of Justice.
Geng, a lawful permanent resident, surrendered to federal authorities on Saturday. Yang, an undocumented immigrant who authorities allege overstayed her visa, was arrested earlier the same day, the DOJ said.
Federal prosecutors allege the defendants — through their El Monte-based ALX Solutions Inc. — exported from the United States to China sensitive technology, including graphic processing units without first obtaining the required license or authorization from the U.S. Department of Commerce.
At their initial appearance late Monday in Los Angeles federal court, a judge ordered Geng released on $250,000 bond and scheduled an Aug. 12 detention hearing for Yang. Arraignment is expected on Sept. 11.
According to the complaint, ALX Solutions was founded shortly after the Commerce Department began requiring licenses for the advanced microchips that Yang and Geng are alleged to have illegally exported. Records indicate that at least 20 shipments by ALX Solutions involved exports from the U.S. to shipping and freight-forwarding companies in Singapore and Malaysia, which commonly are used as transshipment points to conceal illegal shipments to China, according to the DOJ.
According to the complaint and public information, the exported chip is the most powerful computer chip of its kind on the market, designed specifically for the development of self-driving cars, medical diagnosis systems and other AI-powered applications.
Last week, law enforcement personnel searched ALX Solutions’ office and seized phones belonging to Geng and Yang that revealed incriminating communications between the defendants, prosecutors contend, including communications about shipping export-controlled chips to China through Malaysia to evade U.S. export laws.