Leaky Embargo: US Uncovers $300M Smuggling Scheme of AI Servers to China

The technological wall around China has proven to be an illusion. On October 2, 2026, the US Department of Justice (DOJ) brought official charges against the owner of IT company Earthmade Computer. According to prosecutors, the businessman orchestrated the illegal shipment of servers equipped with GPUs (including top-tier NVIDIA H100s) worth over $300 million.

The equipment freely bypassed sanctions, transiting through Malaysia and Singapore. This gray logistics is a macroeconomic death sentence for US export control policy. The incident documents that Asian intermediary countries have turned into a giant hub for laundering AI hardware. American restrictions are incapable of stopping the development of Chinese frontier models; they merely create a shadow market where the cost of computing for PRC labs increases by the margin of logistics smugglers.

Source: U.S. Department of Justice / Bloomberg / Reuters