The U.S. Attorney’s Office for the Southern District of New York has indicted three associates of a U.S. server manufacturer for their alleged involvement in illegally diverting billions of dollars’ worth of Nvidia-powered servers to China. The indictment reveals a troubling scheme that raises serious concerns over U.S. national security, particularly as American artificial intelligence firms like OpenAI and Anthropic encounter increasing competition from Chinese entities such as DeepSeek.
In an unsealed complaint, the government charges Yih-Shyan “Wally” Liaw, Ruei-Tsan “Steven” Chang, and Ting-Wei “Willy” Sun with violating the Export Control Reform Act. The U.S. contends that the servers, equipped with Nvidia chips, are subject to stringent export controls that prohibit sales to China without an appropriate license. According to the indictment, these laws are essential for safeguarding U.S. national security and foreign policy interests.
Liaw is notably a co-founder of Super Micro Computer and holds substantial shares in the company, valued at approximately $464 million. After the indictment was released, Super Micro’s stock plummeted by 12% in after-hours trading. While the company itself is not named as a defendant, it has suspended the three employees involved and cut ties with Sun, a contractor. Super Micro stated that their actions directly contravene company policies and compliance protocols regarding export control laws.
The indictment outlines a complex operation where a Southeast Asian intermediary harvested fake documentation to disguise the ultimate destination of the servers, which were intended for China. The defendants allegedly collaborated to mislead Super Micro’s compliance team, employing “dummy” servers to create the illusion of compliance while the actual servers were already en route to China. Prosecutors contend that these actions resulted in around $2.5 billion in sales since 2024, including $510 million traded with the intermediary in a short span between late April and mid-May 2025-without any U.S. Commerce Department license for such exports.
Chang is accused of obstructing auditors from inspecting the locations where the servers were supposedly kept, orchestrating inspections with auditors labeled as “friendly.” Following issues with its previous auditor, Ernst & Young, Super Micro switched to BDO in 2024.
Nvidia’s GPUs have elicited widespread demand globally, particularly for training advanced AI models. The controversy surrounding these chips has prompted scrutiny from U.S. officials, including former President Donald Trump, who initially moved to limit China’s access to these technologies. However, in December 2020, Trump indicated a willingness to permit shipments of Nvidia’s H200 GPUs to China under conditions ensuring U.S. national security. Recently, Nvidia CEO Jensen Huang announced a revival of H200 manufacturing to meet demand from China.
Prosecutors allege that Liaw encouraged the Southeast Asian company to acquire a more advanced Nvidia chip, known as B200, asking for layout forecasts to secure allocation promises from Nvidia. In troubling communications, Liaw reportedly reacted with sobbing emojis in response to news about Chinese nationals’ arrests for AI chip smuggling, emphasizing a culture of risk that permeated these actions.
“Crimes involving sensitive technology must be met with swift action,” remarked Jay Clayton, former U.S. Attorney and SEC Chairman. Liaw and Sun have been arrested, while Chang remains at large, highlighting the ongoing need for stringent enforcement of export control regulations. Developing this story will be crucial as more details emerge.
Original Source: https://www.cnbc.com/2026/03/19/us-tech-execs-smuggled-nvidia-chips-to-china-prosecutors-say.html
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Publish Date: 2026-03-20 06:23:00
