LA County Operatives Funneled AI Chips To China, Feds Claim

LOS ANGELES, CA — Two Chinese nationals living in Los Angeles County have been arrested on allegations they were paid over $1 million for illegally exporting advanced microchips to China meant for use in sensitive artificial intelligence applications, according to the U.S. Department of Justice.

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, officials said Tuesday.

Geng, a lawful permanent resident, surrendered to federal authorities on Saturday. Yang, an undocumented immigrant who authorities claim overstayed her visa, was arrested the same day, according to officials.

Through their El Monte-based ALX Solutions Inc., the defendants are accused of exporting graphic processing units to China without first obtaining the required authorization from the U.S. Department of Commerce.

ALX Solutions was founded shortly after the Commerce Department began requiring licenses for the advanced microchips. 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, officials claim.

The kind of chip they exported is the most powerful of its kind on the market and is designed specifically for the development of self-driving cars, medical diagnosis systems and other AI-powered applications, according to the DOJ.

Authorities searched ALX Solutions' office last week and claim to have seized phones belonging to Geng and Yang that revealed incriminating communications between the pair, including discussions about about shipping export-controlled chips to China through Malaysia to evade U.S. export laws, according to the DOJ.

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.

City News Service contributed to this report.