Super Micro Co-Founder Charged With Smuggling $2.5 Billion in AI Chips to China

A co-founder of Super Micro Computer, one of America's largest server manufacturers, has been charged with conspiring to smuggle $2.5 billion worth of artificial intelligence hardware to China in violation of US export controls.

The indictment, unsealed Friday in Manhattan federal court, alleges that Yih-Shyan 'Wally' Liaw orchestrated a systematic scheme to divert servers containing advanced AI accelerator chips to Chinese buyers through falsified documents, staged equipment, and a shell company in Southeast Asia.

Liaw, a US citizen who serves as Super Micro's Senior Vice President of Business Development, was arrested alongside Ting-Wei 'Willy' Sun, a Taiwanese broker described as a 'fixer' for Chinese buyers. A third defendant, Ruei-Tsang 'Steven' Chang, a general manager in Super Micro's Taiwan office, remains at large.

The Scheme

According to prosecutors, the operation worked through a company in Southeast Asia referred to in court documents as 'Company-1'. Liaw and Chang directed Company-1 to place purchase orders for servers containing restricted GPUs, falsely representing that Company-1 was the end user.

The servers, often assembled in the United States, were shipped to Super Micro's Taiwan facilities and then delivered to Company-1 elsewhere in Southeast Asia. From there, a logistics company would repackage the equipment in unmarked boxes before shipping to the actual destination: China.

The defendants participated in a systematic scheme to divert massive quantities of servers housing US artificial intelligence technology to customers in China. They did so through a tangled web of lies, obfuscation, and concealment.

— Jay Clayton, US Attorney for the Southern District of New York

The scale of the alleged diversion is striking. Between 2024 and 2025, Company-1 purchased approximately $2.5 billion worth of servers from Super Micro. In a single three-week stretch between late April and mid-May 2025, at least $510 million worth of US-assembled servers were allegedly sent to China.

Dummy Servers and Compliance Evasion

To avoid detection by Super Micro's internal compliance team, the defendants allegedly staged elaborate deceptions. The indictment describes thousands of 'dummy' servers: non-working physical replicas placed in facilities to pass audit inventories.

The compliance team, responsible for ensuring adherence to US export control laws, was presented with falsified records showing Company-1 as the legitimate end user. Communications were fabricated to support the cover story.

John Eisenberg, Assistant Attorney General for National Security, said the case exposed 'alleged efforts to evade US export laws through false documents, staged dummy servers to mislead inspectors, and convoluted transshipment schemes'.

Why This Matters

The Biden administration placed restrictions on the sale of advanced AI chips to China in 2022, a prohibition that the Trump administration has maintained on the most powerful processors while allowing some lower-tier sales in exchange for a 15% commission paid to the US government.

The restrictions reflect a formal determination that advanced AI computing capabilities pose an unacceptable national security risk if transferred to China. The chips at the centre of this case, high-performance GPUs designed for AI training and inference, represent precisely the technology those restrictions were designed to protect.

Roman Rozhavsky, Assistant Director of the FBI's Counterintelligence and Espionage Division, framed the case in national security terms: 'Controlling the export of sensitive US artificial intelligence technology is essential to safeguarding our national security and defending the homeland. That's why combating export violations is among the FBI's highest priorities.'

Super Micro's Response

Super Micro, which trades publicly on the NASDAQ, has not issued a public statement on the indictment. The company's shares fell sharply in pre-market trading following the news.

The charges against Liaw, a co-founder and board member, represent a significant escalation in US enforcement of AI export controls. Previous cases have typically targeted smaller brokers and transshipment networks rather than senior executives of major American technology companies.

Liaw and Sun are expected to appear in federal court in the Northern District of California. Chang is still at large.