Super Micro executives have been found guilty after the US Attorney’s Office for the Southern District of New York accused them of employing fraudulent compliance techniques to smuggle Nvidia servers worth $2.5 billion into China.
Following this situation, the US government called on the relevant authorities to initiate a thorough investigation into the possible techniques individuals use to supply the Chinese market with Nvidia chips, promoting firms in China, such as DeepSeek, to challenge US tech giants, such as OpenAI and Anthropic.
Reports claim that the US government shared a legal document alleging that Yih-Shyan “Wally” Liaw, Ruei-Tsan “Steven” Chang, and Ting-Wei “Willy” Sun collaborated to violate the Export Control Reform Act.
Smuggling of Nvidia chips to China becomes a key concern in the United States
Federal prosecutors have brought significant charges against several executives at US tech firms for diverting Nvidia AI chips to China in violation of export laws.
It is worth noting that this smuggling operation began just after the US Commerce Department announced in October 2022 the official imposition of a ban on the supply of Nvidia’s advanced AI chips to China, citing national security concerns over the potential military use of the component.
Therefore, a black market for critical AI technology components emerged. In this market, intermediaries use false documents, fake firms, and sophisticated shipping routes to illicitly transport the restricted chips into China.
Nvidia is a key player in the international AI chip market, thanks to its essential H100 and A100 processors, which are in high demand for training large language models and other applications.
Liaw is a co-founder of Super Micro Computer, Inc., with a stake valued at $464 million. When reporters reached out to him for comments on the matter, he declined to respond.
However, when they turned to the company for the same request, Super Micro stated that although the firm is not named as a defendant in this case, Liaw serves as a senior vice president of business development, Chang works as a Taiwan-based sales manager, and Sun is a contractor.
Moreover, it noted that, “The actions by these individuals mentioned in the indictment violate our company’s policies and compliance rules, including attempts to bypass relevant export control laws,” further adding that, “Supermicro upholds a strong compliance program and is dedicated to fully following all applicable US export laws.”
On the other hand, sources familiar with the situation anonymously noted that the firm terminated its contract with Sun and placed these employees on leave.
After the indictment was released, Super Micro saw its stock fall 12% in after-hours trading. The indictment highlighted that a company in Southeast Asia served as an intermediary, generating fake documentation to falsely claim they were using the servers, while actually having a logistics partner repack the servers for shipment to China.
At this time, sources said the defendants tried to fool Super Micro’s compliance team by storing “dummy” servers at the Southeast Asian firm while shipping the servers directly to China, then pressuring compliance staff to sign off on the shipments, according to court documents.
Super Micro generated approximately $2.5 billion in sales since 2024. This figure includes $510 million in sales from the Southeast Asian firm into China between late April and mid-May 2025, according to the indictment.
Additionally, the plaintiff stressed that Super Micro failed to obtain the necessary export authorization from the US Department of Commerce to send Nvidia GPU servers to the Chinese market.
The US strengthens its law enforcement amid rising criminal cases
Another similar incident occurred earlier, when Department of Justice officials publicly claimed they had disrupted a smuggling operation that unlawfully exported or attempted to export Nvidia’s advanced AI chips worth at least $160 million to China.
Following this matter, Fanyue Gong and Benlin Yuan faced charges, while a third individual, Alan Hao Hsu, entered a guilty plea concerning the scheme.
Later, Gong and Yuan pleaded not guilty and were scheduled for a jury trial in Houston, Texas, according to court documents. These documents also named the Chinese company that was seeking to acquire many of these chips.
In a statement, Lennart Heim, an independent AI policy expert, stated that, “Many people have suspected that chip smuggling is happening through Malaysia or Singapore, but in this case, it’s occurring directly through the US, where law enforcement is much more vigilant.”
According to him, “This situation raises the question: how many more operations like this are out there?”
Source: https://www.cryptopolitan.com/us-charges-super-micro-execs/
