Key Highlights
- Federal authorities charged three individuals linked to Super Micro, including co-founder Yih-Shyan “Wally” Liaw, with illegally exporting Nvidia-based AI servers to China
- The smuggling operation reportedly diverted at least $2.5 billion worth of advanced AI technology, including more than $500 million shipped within weeks during mid-2025
- Conspirators allegedly deployed decoy servers and fabricated documentation to deceive internal compliance officers and federal export regulators
- Super Micro suspended two staff members and terminated its agreement with a contractor upon receiving notification of the criminal charges
- Shares of SMCI plummeted by as much as 22% during after-hours trading when the indictment became public
Super Micro Computer (SMCI) stock experienced a significant decline in after-hours trading Thursday following the unsealing of a federal indictment that accuses three individuals associated with the company of illegally exporting billions of dollars in AI server equipment to China.
The criminal charges originated from the U.S. Attorney’s Office for the Southern District of New York. Those indicted include Yih-Shyan “Wally” Liaw, a company co-founder and current board member; Ruei-Tsan “Steven” Chang, who serves as a sales manager at the firm’s Taiwan operations; and Ting-Wei “Willy” Sun, who worked as an independent contractor.
SMCI stock plummeted as much as 22% during extended hours following the Manhattan federal court’s release of the indictment documents.
The corporation itself faces no charges. Super Micro released a statement confirming federal prosecutors contacted them Thursday and that the company has been providing full cooperation to the investigation. Both Liaw and Chang were immediately placed on administrative leave while the company severed all ties with Sun.
The alleged smuggling network operated through a Southeast Asian intermediary company serving as a cover. This entity would receive the server shipments, submit fraudulent documentation claiming the hardware would remain within the region, then arrange for a third-party logistics provider to repackage the equipment in unmarked containers before shipping them onward to China.
The scheme reportedly included using common hair dryers to remove serial number labels from genuine machines and affix them to non-functional replicas — referred to as “dummy” servers in court documents — which remained at warehouse locations to mislead government inspectors.
According to federal prosecutors, the defendants even staged these fake machines during an official inspection by a U.S. export control officer.
Massive $2.5 Billion Smuggling Scheme
The cumulative value of illegally diverted equipment from 2024 onward totaled approximately $2.5 billion. Between late April 2025 and mid-May 2025 alone, more than $510 million in server hardware was allegedly shipped to China.
Liaw, whose holdings in Super Micro stock are valued at roughly $464 million per FactSet data, was taken into custody Thursday. Sun was also arrested. Chang currently remains at large.
Federal authorities claim Liaw actively promoted expanding the operation to include cutting-edge hardware. Text message evidence presented in the indictment reveals him inquiring with a contact at the Southeast Asian front company about monthly capacity for Nvidia’s B200 chips — utilizing the Blackwell architecture — beginning in early 2025.
In another communication, Liaw allegedly forwarded a link to a White House press release regarding forthcoming AI export regulations and indicated shipments should be accelerated before new restrictions became enforceable.
When a business associate sent Liaw news coverage about Chinese citizens being arrested for AI chip smuggling, he reportedly 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 a paramount concern. The chip manufacturer stated it maintains close collaboration with both customers and government agencies on compliance initiatives.
“Unlawful diversion of controlled U.S. computers to China is a losing proposition across the board,” a Nvidia spokesperson stated, further noting the company offers no service or technical support for illegally diverted systems.
While the indictment doesn’t explicitly identify specific chip models, Nvidia commands the AI processor market, and its products have been subject to stringent U.S. export restrictions to China implemented since 2022.
In 2024, Super Micro announced that its auditing firm Ernst & Young had stepped down. The company subsequently engaged BDO as its new auditor. According to the indictment, Chang had reportedly arranged for what he characterized as a “friendly” auditor to inspect data center facilities connected to the smuggling scheme.
U.S. Attorney Jay Clayton, appointed by the Trump administration and former SEC chairman, declared in an official statement: “Crimes involving sensitive technology must be met with swift action, otherwise the law is meaningless.”
