Key Highlights
- Federal prosecutors indicted three individuals connected to Super Micro Computer, including co-founder Yih-Shyan “Wally” Liaw, for orchestrating an illegal export operation of Nvidia-powered servers to China
- The operation involved approximately $2.5 billion in diverted AI technology, with more than $500 million shipped during a brief period in mid-2025
- Elaborate deception tactics included using replica servers and fabricated documentation to circumvent company compliance procedures and federal export controls
- Super Micro responded by placing two staff members on administrative leave and terminating its contractor arrangement upon receiving notification of the charges
- Shares of SMCI plummeted 22% during after-hours trading session following public disclosure of the federal indictment
Super Micro Computer (SMCI) experienced a significant stock decline during Thursday’s after-hours session following the public unsealing of a federal indictment. U.S. prosecutors charged three individuals associated with the technology company with orchestrating a multi-billion dollar scheme to illegally export AI servers to China.
https://twitter.com/ns123abc/status/2034788101497425570?s=20
The indictment originated from the U.S. Attorney’s Office for the Southern District of New York. Three defendants face charges: Yih-Shyan “Wally” Liaw, who co-founded Super Micro and currently serves on its board; Ruei-Tsan “Steven” Chang, employed as a sales manager at the company’s Taiwan facility; and Ting-Wei “Willy” Sun, who worked as an independent contractor.
Shares of SMCI dropped 22% during extended trading hours immediately after a Manhattan federal court released the indictment documents.
Super Micro itself faces no criminal charges in the case. Super Micro released a statement confirming federal prosecutors contacted the company on Thursday and that management has provided full cooperation to investigators. The company took immediate action by placing Liaw and Chang on administrative leave while terminating all business ties with Sun.
The accused individuals allegedly operated through a Southeast Asian intermediary company serving as a cover organization. This front company accepted delivery of the servers, submitted fraudulent documentation claiming the equipment would remain within the region, then enlisted a separate logistics provider to repackage the servers in unmarked containers before final shipment to China.
The scheme reportedly involved sophisticated deception methods, including using hair dryers to remove serial number stickers from actual machines and affixing them to non-functional replicas—referred to in court documents as “dummy” servers—which remained at warehouse locations to mislead inspectors.
Prosecutors allege the defendants deployed these replica machines during an inspection conducted by a U.S. export control officer.
Multi-Billion Dollar Scale of Operation
The aggregate value of illegally diverted equipment beginning in 2024 reached approximately $2.5 billion. Between late April 2025 and mid-May 2025 alone, over $510 million in server equipment allegedly reached China through this network.
Liaw, who maintains ownership of approximately $464 million in Super Micro stock based on FactSet data, was taken into custody on Thursday. Authorities also arrested Sun. Chang currently remains at large.
Court filings indicate Liaw actively promoted expanding the operation to include more advanced hardware. Text message evidence presented in the indictment shows him inquiring with a contact at the Southeast Asian intermediary about their monthly capacity for Nvidia’s B200 chips—built on the Blackwell architecture—beginning in early 2025.
Another message allegedly shows Liaw forwarding a link to a White House statement regarding forthcoming AI export regulations, suggesting the operation needed to accelerate shipments before implementation of the new rules.
When a business associate sent Liaw information about Chinese citizens arrested for AI chip smuggling activities, he reportedly responded with crying face emojis.
Nvidia Issues Statement on Compliance
Nvidia, manufacturer of the GPUs installed in the servers central to this case, emphasized that export law compliance remains a critical priority. The company stated it maintains close collaboration with both customers and government agencies on compliance initiatives.
“Unlawful diversion of controlled U.S. computers to China is a losing proposition across the board,” a Nvidia spokesperson said, adding that it provides no service or support for such systems.
The indictment does not specifically identify chip models by name. However, Nvidia maintains dominant market position in AI accelerators, and its products have been subject to stringent U.S. export restrictions targeting China since 2022.
During 2024, Super Micro publicly disclosed that Ernst & Young resigned as its auditing firm. The company subsequently appointed BDO as replacement auditor. According to the indictment, Chang had coordinated for what he described as a “friendly” auditor to examine data center facilities connected to the smuggling operation.
U.S. Attorney Jay Clayton, appointed by the Trump administration and former chairman of the SEC, issued a statement: “Crimes involving sensitive technology must be met with swift action, otherwise the law is meaningless.”
