Super Micro Co-Founder Charged With Smuggling, Departs Board

(Bloomberg) — The US charged a Super Micro Computer Inc. co-founder with illegally diverting billions of dollars in Nvidia Corp.-powered servers to China, initiating its highest-profile crackdown on alleged smuggling of restricted AI technology to the Asian country.

US prosecutors indicted Yih-Shyan “Wally” Liaw for sending US-assembled servers containing Nvidia’s cutting-edge chips to China in violation of US export controls. Liaw and two others associated with Super Micro allegedly sold the hardware to an unnamed Southeast Asian company and coordinated for its ultimate shipment to Chinese customers.

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The move sent shares of Super Micro plummeting on Friday, erasing more than $6 billion from the company’s market value. Super Micro said on Friday afternoon that Liaw had resigned from the board, effective immediately.

The scheme involved efforts by the defendants and others to evade scrutiny by auditors from both Super Micro and the US government, the indictment said — including by falsifying records and setting up “dummy” servers to which they removed and affixed serial numbers with a hair dryer. Also charged in the latest case were Ruei-Tsang “Steven” Chang, who served as a general manager in Super Micro’s Taiwan office, and Ting-Wei “Willy” Sun, an outside contractor described by US authorities as a “fixer” who allegedly aided in the diversion.

Super Micro isn’t named as a defendant. The San Jose, California-based company said in a statement that it’s cooperating with US authorities, and added that it has put Liaw and Chang on administrative leave and ended its relationship with Sun. Their alleged conduct “is a contravention of the company’s policies and compliance controls, including efforts to circumvent applicable export control laws and regulations,” Super Micro said, adding that it “maintains a robust compliance program and is committed to full adherence to all applicable US export and re-export control laws and regulations.”

The company’s shares fell 33% to $20.53 at the close in New York, marking the biggest single-day decline since October 2018.

In announcing that Liaw was resigning from the board, Super Micro said that it had named DeAnna Luna as acting chief compliance officer. Prior to joining the company in 2024, she oversaw export licensing at Intel Corp.

The indictment of an executive at the firm — which is both a Fortune 500 company and a key Nvidia partner — marks a dramatic escalation of Trump officials’ efforts to more strictly enforce chip export restrictions that were first imposed in 2022. It comes on the heels of several smaller-scale chip smuggling cases last year, as well as a probe into Nvidia’s biggest Southeast Asian customer.

The case demonstrates Trump officials’ continued intent to ramp up export controls enforcement, even as Washington greenlights initial China sales of some of the very same Nvidia chips that Super Micro employees allegedly smuggled. US rules still require companies to seek licenses for AI chip sales to the Asian country.

The indictment doesn’t make any allegations against Nvidia, whose chief executive officer, Jensen Huang, has insisted there’s “no evidence” of AI chip diversion. Yet it comes at a particularly fraught moment for the world’s most valuable company. Lawmakers were already looking at ways to both crack down on chip smuggling and stop Trump’s team from issuing more export licenses — and this case could add fuel to the fire.

Administration officials are also actively debating whether to require export licenses for AI chip sales to more countries, which some officials have argued would help address chip smuggling.

“We continue to work closely with our customers and the government on compliance programs as export regulations have expanded,” Nvidia said in a statement. “Unlawful diversion of controlled US computers to China is a losing proposition across the board — Nvidia does not provide any service or support for such systems, and the enforcement mechanisms are rigorous and effective.”

Company-1

Super Micro is a major assembler of AI servers containing Nvidia’s cutting-edge components, competing with the likes of Taiwan’s Foxconn Technology Group. It accounts for about 9% of the chipmaker’s revenue, according to data compiled by Bloomberg. And according to the US indictment, Super Micro derives a significant chunk of its own revenue from the Southeast Asian company involved in the alleged smuggling scheme — identified in court papers only as “Company-1.”

The defendants’ relationship with that firm dates back to 2024, the prosecutors said. It began when Liaw, Super Micro’s co-founder, along with Chang, the Taiwan-based manager, agreed with a Company-1 executive to coordinate shipments to Chinese customers — who couldn’t legally purchase Nvidia AI chips themselves — via the Southeast Asian firm. The servers were often assembled in the US, delivered to Company-1 in Southeast Asia, and routed to China via a “rotating cast” of third-party brokers, the indictment said.

The business proved lucrative. In the fourth quarter of Super Micro’s 2024 fiscal year, Company-1 was the California firm’s eleventh most profitable customer globally, US prosecutors said. But the rapid growth also raised some eyebrows internally, according to the indictment, which said that Super Micro imposed a temporary hold on shipments to Company-1 and ordered an audit in late 2024.

The defendants took steps to “undermine” the process, US prosecutors alleged, including by arranging for a “friendly” inspector. They also worked with Company-1 executives to falsify lease agreements showing that the Southeast Asian firm indeed had space to house all the servers it was purchasing, even though that wasn’t the case.

And that December, Liaw — Super Micro’s co-founder — began arranging for shipments of B200 chips from Nvidia’s latest generation of products. He texted an executive at Company-1 requesting a forecast of how many of those processors the firm could accept — so that “we can propose to [Nvidia] with the way they can accept,” prosecutors said. He also introduced that executive to Sun, the outside contractor and third defendant in the US case.

But they soon had a problem. In January 2025, President Joe Biden’s administration unveiled sweeping export controls on Nvidia’s global AI chip sales, an expansion of rules that covered China and around forty other countries. That meant that shipments of Nvidia-powered servers to Southeast Asia would now need Washington’s permission, starting in mid-May. “We need to speed these up before May 13!” Liaw, Super-Micro’s co-founder, allegedly wrote to the Company-1 executive, sending a link to a White House press release.

After a few months — and another temporary shipment pause imposed by Super Micro’s compliance team — Company-1 would purchase around $510 million worth of Super Micro servers with Nvidia’s B200 and H200 chips, the latter of which are the top products from the chipmaker’s previous generation. That’s around a fifth of the total $2.5 billion of Super Micro sales to Company-1 that the defendants caused, according to the indictment.

Trump’s team wound up scrapping the Biden curbs before they took effect. The US doesn’t currently require a license to ship Nvidia AI chips to most Southeast Asian countries. Trump’s team has twice drafted rules that would impose such a mandate — once in a regulation that singled out Malaysia and Thailand in particular, and more recently as part of a draft global framework. But that earlier rule was never published, and the Commerce Department withdrew the latter shortly after circulating it to other federal agencies.

Dummy Servers

For Company-1, though, the scrutiny didn’t go away. Super Micro planned another audit of the Southeast Asian firm later in 2025, which the defendants anticipated would focus on shipments of B200 servers, according to the indictment. They coordinated to stage warehouses with dummy servers, photographs of which they sent to a Super Micro auditor who was supposed to be completing the inspection in August — but was instead “off-site enjoying entertainment paid for by Company-1,” the indictment said.

US officials informed Super Micro that month that they had reason to believe Company-1 was diverting chip shipments to China. They requested a hold on all shipments to Company-1 and planned for a US government inspection, which took place in December. The day before that inspection, Sun and an unnamed third-party broker prepared dummy servers once again, as allegedly captured by security footage.

 

Liaw, a US citizen, and Sun, a citizen of Taiwan, were both arrested Thursday, according to a statement from the office of Manhattan US Attorney Jay Clayton, and have made initial appearances in federal court in San Jose, California. Their lawyers didn’t immediately respond to requests for comment. Chang, a Taiwanese citizen, remains a fugitive.

Liaw, 71, co-founded Super Micro in 1993, according to a profile on the company’s website, and was on its board of directors until Friday. Since 2022, he’s served as senior vice president of business development.

Liaw, Chang, 53, and Sun, 44, are each charged with conspiracy to violate export controls, which carries a maximum prison sentence of 20 years, if they’re convicted. They’re also charged with conspiracy to smuggle goods from the US and conspiracy to defraud the US, both of which are punishable by as much as five years behind bars.

The case is US v. Liaw, 26-cr-00100, US District Court, Southern District of New York (Manhattan).

–With assistance from Ian King, Debby Wu and Mackenzie Hawkins.

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