Super Micro Co-Founder Indicted on Charges of Smuggling Microchips to China

US Charges Super Micro Co-Founder with Illicit AI Technology Diversion to China

The US Department of Justice has initiated its highest-profile case against alleged smuggling of restricted AI technology to China, charging Super Micro Computer Inc. co-founder Yih-Shyan "Wally" Liaw with illegally diverting $2.5 billion in Nvidia Corp.-powered servers to China.

According to the indictment, Liaw and two others associated with the company allegedly sold AI technology through a Southeast Asia company, knowing it would be sent to China in violation of US export controls. Ruei-Tsang "Steven" Chang, a manager in the company's Taiwan office, and Ting-Wei "Willy" Sun, an outside contractor described as a "fixer," also face charges in the case.

The indictment marks the biggest chip smuggling case pursued by US prosecutors since restricting Nvidia shipments to China in 2022. It follows several smaller-scale arrests last year, after the Trump administration pledged to crack down on violations of rules imposed to prevent China from using American AI accelerators to gain a military edge.

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Super Micro's shares plummeted 29% in early trading on Friday, the biggest intraday decline since October 30, 2024. The company, a major assembler of AI servers containing Nvidia's cutting-edge components, competes with Foxconn Technology Group and accounts for approximately 9% of Nvidia's revenue.

Liaw and Sun were arrested Thursday, while Chang remains a fugitive. Super Micro has put Liaw and Chang on administrative leave and ended its relationship with Sun, stating that the defendants' alleged conduct "is a contravention of the company's policies and compliance controls."

Prosecutors alleged that the defendants and others caused the sale of $2.5 billion in Super Micro servers to a Southeast Asia company, with the intention that they would be passed on to China. The Chinese customers received Super Micro's "flagship" products, including servers incorporating Nvidia's controlled B200 and H200 chips, in unmarked boxes.

Nvidia stated that "strict compliance is a top priority" and continues to work closely with customers and the government on compliance programs as export regulations have expanded. This is not the first time the US has made arrests for alleged smuggling of Nvidia chips to China, with similar cases reported in November and August.

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