HOUSTON (Covering Katy News) — A Missouri City man and his Sugar Land-based company pleaded guilty to smuggling advanced artificial intelligence computer chips to China, marking the first convictions under a new federal initiative targeting illegal technology exports.
Alan Hao Hsu, also known as Haochun Hsu, and his company Hao Global LLC each pleaded guilty to smuggling charges, U.S. Attorney Nicholas Ganjei said at a Houston news conference on Monday.
"These are not AI like ChatGPT or Google's Gemini," Ganjei said. "The difference between shooting a bullet and throwing a bullet" separates these advanced chips from less powerful models approved for export.
Sugar Land Company Used as Front for Illegal Chip Exports
Hsu, a naturalized U.S. citizen and Fort Bend County resident, founded Hao Global in November 2014. The Sugar Land company sat inactive until October 2024, when Hsu began buying computer chips that require government permission to export, operating from a vacant office suite with a fake address.
Between October 2024 and May 2025, Hsu and Hao Global purchased or tried to purchase $160.8 million worth of advanced Nvidia computer chips from a supplier in North Carolina, paying $53 million, according to court documents.
Advanced AI Chips Have Military Applications
The chips — NVIDIA's H100 and H200 models — are among the most advanced in the world and can be used for military purposes including designing weapons, operating drones and analyzing intelligence data, Ganjei said.
Hsu sent the chips to China and Hong Kong using fake shipping documents and routing them through Singapore and Malaysia. He never obtained the required export license from the Commerce Department.
Prosecutors estimate about $50 million worth of chips successfully reached China. Law enforcement stopped the $160 million worth that Hsu tried to export.
"The country that controls these chips will dominate AI. And the country that dominates AI will lead the future," Ganjei said.
Two Other Defendants Charged in Separate GPU Smuggling Schemes
Two other defendants were charged in separate schemes involving more than $30 million worth of computer chips seized from New Jersey warehouses.
Fanyue Gong, also known as Tom Gong, 43, a New York resident, was arrested Dec. 3 and charged with hiring workers to remove NVIDIA labels from the chips and replace them with fake labels bearing the made-up company name "SANDKYAN." On May 12, 2025, an undercover agent watched workers relabeling chips at a New Jersey warehouse. Federal agents seized more than $30 million worth of equipment the next day.
U.S. Attorney's Office
NVIDIA chip were relabeled with the phony name SANDKYAN.
Benlin Yuan, 58, a Canadian citizen who resides in Mississauga, Ontario, and is an executive at a Virginia-based company owned by a Beijing firm, was arrested Nov. 28 and charged with helping recruit inspectors for mislabeled chips and telling them not to reveal the chips were going to China.
Yuan and Gong are currently in custody pending further criminal proceedings. If convicted, Yuan faces up to 20 years in prison and a $1 million fine. If convicted, Gong faces up to 10 years in prison.
Missouri City Man Acknowledged Export Rules Before Violating Them
Court documents show Hsu acknowledged in writing that regulated products must stay in the U.S. without proper government licenses, but he is charged with illegally exported them anyway. His first sale involved $10.8 million worth of chips in late 2024.
Hsu traveled from Houston to North Carolina on Nov. 12, 2024, to personally inspect the chips, then sent shipping paperwork that falsely described them as "Computer Servers." The chips were shipped to Singapore on Nov. 25, 2024, then sent to Hong Kong without the required license.
On Feb. 24, 2025, Commerce Department agents stopped a shipment of 32 chips in Atlanta.
Operation Gatekeeper Targets Technology Smuggling to China
Christopher G. Raia, assistant director in charge of the FBI's New York field office, said the case highlights "the importance of partnerships" in combating threats from foreign governments attempting to obtain restricted technology.
"This is just the beginning of Operation Gatekeeper," Ganjei said. "The Southern District of Texas will find each and every person or business working to illegally export these critical technologies to our strategic competitors."
Hsu faces up to 10 years in prison on the smuggling charge and five years on the export violations charge. He has agreed to cooperate with authorities and could receive a reduced sentence. Hsu is scheduled to be sentenced Feb. 18 and was permitted to remain on bond pending sentencing.