US Federal prosecutors have charged a co-founder of Super Micro Computer Inc. (Supermicro) and two associates in a massive conspiracy to illegally divert billions of dollars worth of restricted AI technology to China.
The indictment, unsealed Thursday by the US Attorney's Office for the Southern District of New York, alleges a sophisticated scheme to bypass US export controls designed to protect national security.
The alleged conspiracy
Yih-Shyan "Wally" Liaw, 71, a co-founder and Senior Vice President of Supermicro, is accused of orchestrating the diversion of high-performance servers powered by Nvidia graphics processing units (GPUs). Prosecutors allege that since 2024, Liaw and his accomplices sold approximately US$2.5 billion in equipment to a "middleman" company in Southeast Asia, identified in court papers as "Company-1," with the full knowledge that the hardware would be forwarded to China.
The "flagship" servers—which are subject to strict US export bans—were reportedly shipped in unmarked boxes to conceal their contents. To deceive internal compliance teams and federal investigators, the defendants allegedly:
• Staged "dummy" servers: Non-working units were placed in Southeast Asian warehouses to fool auditors into thinking the technology remained outside of China.
• Falsified Documentation: The group prepared phony communications to ensure internal approval of the shipments.
• Evaded Inspections: One defendant reportedly coordinated with a "friendly" auditor to avoid scrutiny of data centers where the servers were supposed to be stored.
Arrests and legal charges
Liaw, a US citizen, and Ting-Wei "Willy" Sun, 44, a Taiwanese contractor described as a "fixer," were arrested Thursday and made their initial court appearances in San Jose, California. A third defendant, Ruei-Tsang "Steven" Chang, 53, a sales manager in Supermicro's Taiwan office, remains at large.
The trio faces several counts, including:
• Conspiracy to violate export controls (Maximum 20 years in prison).
• Conspiracy to smuggle goods from the US (Maximum 5 years).
• Conspiracy to defraud the US (Maximum 5 years).
"Crimes involving sensitive technology must be met with swift action," said Manhattan US Attorney Jay Clayton. "Otherwise, the law is meaningless."
Corporate and market reaction
Supermicro (SMCI) shares plummeted as much as 12% in extended trading following the news. The company, which accounts for roughly 9% of Nvidia's revenue, issued a statement distancing itself from the defendants.
"The conduct by these individuals alleged in the indictment is a contravention of the company's policies and compliance controls," Supermicro stated.
The company confirmed it has placed Liaw and Chang on administrative leave, terminated its relationship with Sun, and is cooperating fully with the government. Supermicro emphasized that the company itself has not been named as a defendant in the indictment.
Geopolitical context
The charges come amid a tightening "AI arms race" between the US and China. While President Donald Trump recently signaled a willingness to allow certain Nvidia H200 chips to be shipped to China under specific conditions, the B200 "Blackwell" chips Liaw allegedly tried to secure for his Chinese clients remain under strict prohibition.
Nvidia responded to the news by reiterating its commitment to compliance. "Strict compliance is a top priority for Nvidia," the company said, adding that it does not provide support or service for products illegally diverted to China.
Article edited by Jack Wu
