Federal prosecutors in Manhattan unsealed an indictment on March 19 charging three individuals tied to Super Micro Computer with conspiring to divert high-performance AI servers from the United States to China in violation of export-control laws. The defendants are Yih-Shyan "Wally" Liaw, a Supermicro co-founder, board member, and senior vice president; Ruei-Tsang "Steven" Chang, a manager in the company's Taiwan operation; and Ting-Wei "Willy" Sun, a contractor and broker. Liaw and Sun were arrested; Chang remains a fugitive.
The indictment describes a layered transshipment scheme. Liaw and Chang allegedly directed a Southeast Asia-based intermediary to place purchase orders for servers assembled in the United States, with China as the undisclosed final destination. The intermediary purchased approximately $2.5 billion worth of servers from Supermicro between 2024 and 2025. Prosecutors allege that at least $510 million in U.S.-assembled servers were diverted to China in a six-week window between late April and mid-May 2025 alone. The servers incorporated controlled AI GPUs; outside reporting indicates the systems used Nvidia-based hardware, though DOJ did not name a specific chip model in the indictment.
The concealment methods alleged in the indictment are unusually detailed. Prosecutors say defendants staged thousands of non-working replica servers at declared storage locations so that Supermicro's own compliance team would believe restricted hardware was still on site. Workers allegedly used hair dryers to remove and reattach serial-number stickers from server boxes and dummy units in order to pass internal inspections. False end-user paperwork was also used to misrepresent the final destination.
The charges carry serious exposure. The export-controls conspiracy count under the Export Controls Reform Act carries a maximum sentence of 20 years. The smuggling conspiracy and fraud conspiracy counts each carry a maximum of 5 years. U.S. Attorney Jay Clayton said the defendants "participated in a systematic scheme to divert massive quantities of U.S. artificial intelligence technology to customers in China" through "a tangled web of lies, obfuscation, and concealment." Assistant Attorney General John Eisenberg described the use of "staged dummy servers to mislead inspectors, and convoluted transshipment schemes, in order to obfuscate the true destination of restricted AI technology."
Supermicro is not charged. The company said the alleged conduct "is a contravention of the Company's policies and compliance controls," placed Liaw and Chang on administrative leave, and terminated its relationship with Sun. Nvidia issued a statement saying "unlawful diversion of controlled U.S. computers to China is a losing proposition across the board" and that it does not provide service or support for diverted systems.
The case lands against a backdrop of prior governance pressure at Supermicro. Ernst & Young resigned as the company's auditor in October 2024 after raising concerns about governance, transparency, and financial reporting integrity. A special committee subsequently found no evidence of management misconduct and no restatement of financials was required, but the episode had already depressed the stock from its AI-boom highs. Supermicro shares fell approximately 27 percent on March 20 as the indictment became public, a drop that erased nearly $5 billion in market value. The case represents one of the largest publicly described AI server diversion enforcement actions to date and illustrates both the scale of demand for controlled AI hardware in China and the sophistication of the transshipment infrastructure that has developed to meet it.
Sources: Reuters, New York Times, DOJ
–
By the Control Plane Editorial Team