Key Points
- Federal authorities indicted three individuals linked to Super Micro, including co-founder Yih-Shyan “Wally” Liaw, for illegally exporting Nvidia-based AI servers to China
- The operation allegedly diverted approximately $2.5 billion in advanced AI hardware, with more than $500 million shipped during a brief period in mid-2025
- The scheme employed decoy servers and fraudulent documentation to bypass both internal compliance systems and federal export controls
- Super Micro suspended two staff members and terminated a contractor agreement upon notification of the charges
- Shares of SMCI plunged up to 22% during after-hours trading when the indictment became public
Super Micro Computer (SMCI) experienced a dramatic stock decline in after-hours sessions Thursday following the public release of a federal indictment accusing three company-affiliated individuals of orchestrating a multi-billion dollar illegal export operation of AI servers to China.
The indictment originated from the U.S. Attorney’s Office in Manhattan’s Southern District. Those facing charges include 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 operations; and Ting-Wei “Willy” Sun, who worked as an independent contractor.
Shares of SMCI tumbled by as much as 22% following the Manhattan federal court’s disclosure of the indictment.
The corporation itself faces no charges. Super Micro released a statement confirming federal prosecutors informed them Thursday and emphasized its ongoing cooperation with the investigation. The company suspended Liaw and Chang pending further review and severed ties with Sun.
The purported smuggling network operated through a Southeast Asian entity serving as a cover organization. This intermediary company would receive the advanced servers, submit fraudulent export documentation claiming the equipment would remain within Southeast Asia, then coordinate with a separate shipping company to repackage the technology in unmarked containers before routing them to China.
The scheme allegedly included using standard hair dryers to remove serial number stickers from genuine servers and affix them to non-functional replica units — referred to as “dummy” servers in court documents — which remained at warehouse locations to mislead regulatory inspectors.
Federal prosecutors allege the defendants even deployed these decoy machines during an inspection conducted by a U.S. export control official.
Multi-Billion Dollar Diversion Scheme
The cumulative value of illegally exported hardware since 2024 totaled roughly $2.5 billion. Between late April 2025 and mid-May 2025 alone, over $510 million in servers allegedly reached China through this network.
Liaw, whose holdings in Super Micro stock are valued at approximately $464 million per FactSet data, was taken into custody Thursday. Sun was also arrested. Chang is currently at large.
Federal authorities claim Liaw actively advocated for expanding the operation to include cutting-edge hardware. Text communications referenced in the indictment reveal him inquiring with a Southeast Asian contact about monthly capacity for Nvidia’s B200 chips — utilizing the Blackwell platform — beginning in early 2025.
Another message shows Liaw allegedly forwarding a link regarding a White House announcement about forthcoming AI export regulations, suggesting accelerated shipments before implementation.
When a business associate sent Liaw news coverage about Chinese citizens arrested for AI chip smuggling, he purportedly responded with crying face emojis.
Nvidia’s Statement
Nvidia, whose graphics processing units powered the servers central to this case, emphasized that export regulation compliance remains paramount. The chipmaker stated it maintains close coordination with clients and government agencies regarding 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 specific chip models weren’t explicitly identified in the indictment. Nevertheless, Nvidia commands the AI processor market, and its technology has been subject to stringent U.S. export restrictions targeting China since 2022.
In 2024, Super Micro revealed that Ernst & Young had resigned as its auditor. The company subsequently engaged BDO as its new auditing firm. According to the indictment, Chang had reportedly arranged for what he characterized as a “friendly” auditor to examine data center operations connected to the smuggling network.
U.S. Attorney Jay Clayton, the Trump-appointed prosecutor who also served as former SEC chairman, said in a statement: “Crimes involving sensitive technology must be met with swift action, otherwise the law is meaningless.”
