The US Department of Justice has detained two men accused of attempting to smuggle at least 160 million US dollars worth of Nvidia Corp. artificial intelligence chips to China, Bloomberg reports. A third individual, the owner of a Houston-based company, has already pleaded guilty.

Authorities allege the men ran a network spanning warehouses across the United States and a Houston business operated by Alan Hao Hsu. The operation reportedly replaced Nvidia’s H100 and H200 chip labels with a fictitious “Sandkyan” brand before shipment. Fanyue Gong, a Chinese citizen living in Brooklyn, and Benlin Yuan, a Canadian from Ontario, are said to have conspired with employees of a Hong Kong logistics firm and a China-based AI technology company to circumvent US export controls.

The case highlights the strategic value of Nvidia’s AI chips amid intensifying US-China tech rivalry. The US has heavily restricted exports of such technology to China, citing national security concerns, a policy that has cost Nvidia and other chipmakers billions in revenue. Earlier this year, under President Donald Trump, some rules were eased, allowing limited sales of Nvidia H200 chips to China.

Santa Clara-based Nvidia has since moved on to its Blackwell series, with another upgrade planned in 2026. CEO Jensen Huang has long advocated for controlled sales to China to expand the global reach of American technology. An Nvidia spokesperson said on Monday that its export system is “rigorous and comprehensive,” adding that all secondary-market sales undergo strict scrutiny to prevent diversion.