Supermicro Co-founder, Executives Charged in Alleged Scheme to Unlawfully Export AI Servers with Nvidia Chips to China
Federal authorities have charged three individuals associated with Super Micro Computer, Inc. (Supermicro), including a co-founder and two executives, in connection with an alleged scheme to unlawfully export advanced artificial intelligence (AI) servers containing Nvidia GPU chips to China. Yih-Shyan "Wally" Liaw, a U.S. citizen and Supermicro co-founder and executive, and Ting-Wei "Willy" Sun, a contractor, were arrested on Thursday. Ruei-Tsang "Steven" Chang, a Supermicro sales manager, remains a fugitive.
Charges and Arrests Unsealed
The U.S. Department of Justice (DOJ) unsealed an indictment in Manhattan federal court, naming Liaw, 71, along with Chang and Sun. The charges include conspiring to violate the Export Controls Reform Act, conspiring to smuggle goods, and conspiring to defraud the United States. If convicted, each individual faces a maximum sentence of 20 years in prison for the export controls violation alone, with additional sentences possible for the other conspiracy charges.
Allegations of Export Control Violations
Prosecutors allege that between 2024 and 2025, Liaw collaborated with Chang and Sun to identify Chinese buyers for servers equipped with Nvidia GPU chips. The alleged scheme involved circumventing U.S. export control laws, which designate advanced AI accelerators and related computing devices as strategic national security assets, restricting their sale to Beijing. Specifically, the indictment refers to Nvidia's B200 and H200 graphics processing units (GPUs), which require a government license for export to China.
The alleged diversion scheme included several deceptive steps:
- Directing an unnamed Southeast Asian company to place purchase orders with Supermicro, falsely indicating the servers were for its own operations.
- Assembling servers in the U.S. and shipping them to Supermicro’s facilities in Taiwan, and then to a different location for the Southeast Asian company.
- The Southeast Asian company, allegedly in concert with Liaw and Chang, would transfer the servers to a shipping company. This shipping company then reportedly removed identifying packaging, placed the servers in unmarked boxes, and sent them to China.
- To avoid detection by Supermicro’s compliance team and U.S. export control officers, the defendants and Southeast Asian company executives allegedly fabricated documents and communications to indicate the Southeast Asian company was the legitimate end buyer.
- They also reportedly staged thousands of "dummy" servers at the Southeast Asian company's supposed storage facilities, while the actual servers had already been shipped to China. Surveillance footage reportedly showed Sun and a co-conspirator altering serial numbers on these dummy servers, which were later presented during an audit by the U.S. Department of Commerce.
- Encrypted messaging applications were also allegedly used to discuss server quantities, delivery locations in China, and methods to avoid detection.
- Liaw is further alleged to have advocated for the Southeast Asian company to adopt the more advanced B200 chip in late 2024 and urged accelerated shipments before new export rules became effective in 2025.
Authorities claim the Southeast Asian company purchased approximately $2.5 billion worth of Supermicro servers under this arrangement. Within a three-week period from late April to mid-May 2025, approximately $500 million to $510 million worth of U.S.-assembled servers were allegedly shipped to China through this conspiracy. The server maker reportedly did not possess a U.S. Commerce Department license for these exports.
U.S. Attorney Jay Clayton stated that the alleged scheme involved a "systematic effort to divert massive quantities of servers housing U.S. artificial intelligence technology to customers in China" through deception, posing a direct threat to U.S. national security.
Supermicro and Nvidia Responses
Supermicro confirmed it is not named as a defendant in the indictment. The company stated that Liaw, a board member and Senior Vice President of Business Development, has been placed on administrative leave. Chang, identified as a sales manager in Taiwan, has also been placed on administrative leave, and Sun's contracting relationship has been terminated. Supermicro reported it is cooperating with the government investigation, asserting that the alleged conduct contradicts company policies and compliance controls, and that it maintains a robust compliance program.
Nvidia stated that strict compliance is a top priority and that it works with customers and the government on compliance programs, adding that it provides no service or support for unlawfully diverted systems.
Context of Export Controls
The export controls allegedly violated by the individuals were implemented by the U.S. Department of Commerce’s Bureau of Industry and Security in October 2022. These controls aim to prevent advanced AI accelerators and related computing devices from being sold to Beijing, designating them as strategic national security assets. The alleged scheme occurs amid ongoing concerns that controlled chips are reaching China, often through transshipment via nearby countries.
Background on Supermicro and Liaw
Supermicro’s stock declined approximately 12% in after-hours trading following the news of the arrests and charges.
Liaw has a history with compliance-related issues at Supermicro. In 2018, Supermicro’s stock was suspended from trading on Nasdaq due to non-compliance with listing standards during an SEC investigation into accounting practices, at which point Liaw resigned from all positions. The company paid a $17.5 million penalty in 2020. Liaw returned to Supermicro in an advisory role in May 2021, to a full-time executive post in August 2022, and rejoined the board in December 2023.
In August 2024, short-seller Hindenburg Research published a report alleging a return of accounting issues, which Supermicro denied. Auditor Ernst & Young (EY) subsequently raised concerns about governance and transparency, resigning in October 2024, stating it could "no longer rely on management's and the Audit Committee's representations." Supermicro later hired BDO USA as its auditor, and a special committee concluded in December 2024 that there was no evidence of fraud or misconduct, but recommended replacing the CFO due to identified lapses.