Beijing is accused of using a combination of smuggling, corporate insiders and fraudulent AI accounts to gain access to advanced US technology. The latest allegations involving Nvidia CEO Jensen Huang have brought renewed attention to the issue ahead of the expected Trump-Xi summit in Shenzhen.
A growing series of investigations in the United States and Asia has exposed alleged Chinese efforts to obtain advanced semiconductor technology and artificial intelligence capabilities. The methods range from diverting restricted Nvidia chips through Southeast Asian intermediaries to stealing confidential designs and using fake accounts to extract information from American AI models.
The issue has become a major national security concern in Washington. Chris McGuire, an analyst at the Council on Foreign Relations, has described control over advanced semiconductors as “the defining strategic issue of our time”, arguing that the latest Nvidia-related allegations are part of a much longer-running contest.
The focus is on advanced processors that Washington has barred from being exported to China. One alleged route involves servers officially destined for customers in Singapore, Malaysia or Japan before being redirected to Chinese buyers.
On March 19, US federal authorities arrested Yih-Shyan “Wally” Liaw, co-founder of Super Micro, accusing him of helping divert Nvidia-powered servers worth approximately $2.5 billion to China through a Southeast Asian company. According to prosecutors, Liaw responded with crying emojis after an intermediary informed him that Chinese smugglers had been arrested.
In July, Taiwanese authorities searched the home of an Nvidia employee who was subsequently detained on allegations of falsification. The investigation reportedly expanded to nine suspects, including former employees of Nvidia and Super Micro. On October 2, Greg Lui, owner of California-based Earthmade Computer, was also charged with allegedly shipping more than $300 million worth of Nvidia-powered servers to China without export licences between 2023 and 2024.
Corporate insiders and stolen chip designs
While hardware can be moved through shipping containers, the knowledge required to design advanced processors can be transferred through a USB drive or a personal cloud account.
Former Google engineer Linwei Ding was accused of stealing more than 2,000 pages of confidential material between May 2022 and April 2023. The documents included information about Google’s custom-designed Tensor Processing Units, the software used to coordinate thousands of chips in supercomputers and SmartNIC networking technology.
Ding was also allegedly working secretly for two Chinese companies while establishing his own start-up. His activities came to light after a presentation to investors in China. He was convicted in January, although a judge later dismissed the economic espionage charges while upholding the theft of trade secrets. On October 19, the US State Department imposed sanctions on five Chinese entities linked to the case.
AI models targeted through fake accounts
Another alleged method involves extracting knowledge from American AI systems through a process known as distillation. By repeatedly querying an advanced model and using its responses to train another system, developers can potentially reduce the time and cost required to build competing technology.
In February, Anthropic accused Chinese AI companies DeepSeek, Moonshot AI and MiniMax of using more than 24,000 fraudulent accounts to generate over 16 million exchanges with its Claude model. The alleged access was facilitated through so-called grey-market platforms that resell proxy connections to AI services restricted in China.
The White House warned in April of industrial-scale campaigns targeting American AI technology. On September 8, the FBI, National Security Agency and Cybersecurity and Infrastructure Security Agency issued an advisory identifying six Chinese companies of concern: DeepSeek, Moonshot, Alibaba, MiniMax, StepFun and Zhipu.
Days later, Anthropic disclosed that Zhipu had generated more than 3.4 million exchanges with Claude over a 17-day period. Analysts at the Special Competitive Studies Project have compared the alleged tactics to an updated version of the Soviet-era intelligence playbook, replacing recruited spies with thousands of fake online accounts.
Nvidia allegations add another dimension
Taken together, the cases point to several alleged channels for acquiring restricted technology: smuggling advanced hardware, obtaining confidential technical information through corporate insiders and extracting capabilities from AI models.
The latest allegations involving Nvidia founder and CEO Jensen Huang could add another dimension. Nvidia’s board has reportedly launched an investigation into his relationship with Alice Huang, an executive at Singapore-based partner company Megaspeed, who is suspected of having links to Chinese intelligence. The allegations have not been established.
The case has also revived concerns about the use of personal relationships as an intelligence-gathering tool. Some analysts have previously warned that so-called honey-trap operations could give Beijing an asymmetric advantage in targeting influential figures.
The timing is particularly sensitive as US President Donald Trump and Chinese President Xi Jinping prepare for an expected meeting in Shenzhen, where artificial intelligence is likely to feature prominently. The controversy also presents a paradox for Huang, who has previously advocated easing US export restrictions on advanced chips to China.
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