Key Highlights
- Federal authorities indicted three individuals linked to Super Micro, including company co-founder Yih-Shyan “Wally” Liaw, for orchestrating an illegal export operation of Nvidia-based servers to China
- The complex smuggling operation involved approximately $2.5 billion worth of restricted AI hardware, with more than $500 million shipped during a brief period in spring 2025
- Conspirators allegedly employed decoy equipment and forged documentation to circumvent company safeguards and federal export enforcement agencies
- The company suspended two staff members and severed ties with an outside contractor following notification of the criminal charges
- Shares of SMCI plummeted up to 22% during after-hours trading after the criminal complaint became public
Super Micro Computer (SMCI) experienced a dramatic stock decline in extended trading Thursday following the public disclosure of a federal indictment accusing three individuals associated with the firm of orchestrating a multi-billion dollar scheme to illegally export AI computing equipment to China.
🚨BREAKING: SUPER MICRO CO-FOUNDER ARRESTED FOR SMUGGLING $2.5B IN NVIDIA GPUs TO CHINA
>SMCI co-founder Yih-Shyan "Wally" Liaw arrested today
>personally holds $464 MILLION in SMCI stock
>charged with smuggling BILLIONS in Nvidia servers to china
>used a southeast asian shell… https://t.co/SfIFc0SPed pic.twitter.com/93QE72ddph— NIK (@ns123abc) March 20, 2026
The criminal charges originated from the U.S. Attorney’s Office for the Southern District of New York. Federal prosecutors named three defendants: Yih-Shyan “Wally” Liaw, who helped establish Super Micro and currently serves on its board of directors; Ruei-Tsan “Steven” Chang, employed as a sales manager at the company’s Taiwan operations; and Ting-Wei “Willy” Sun, working as an independent contractor.
Shares of SMCI declined by as much as 22% after regular market hours once the Manhattan federal court unsealed the indictment.
The corporation itself faces no criminal charges. Super Micro released a statement confirming it received notification from federal authorities Thursday and has provided full cooperation to the investigation. The company immediately suspended Liaw and Chang pending the outcome and terminated its business arrangement with Sun.
The purported smuggling network operated through a Southeast Asian intermediary entity serving as a shell operation. This front company accepted the server shipments, submitted fraudulent export documents claiming the technology would remain within the region, then contracted a third-party logistics provider to repackage the equipment in unmarked containers before final transport to China.
The scheme allegedly included using household hair dryers to remove serial number stickers from authentic machines and affix them to non-functional replicas — described in court documents as “dummy” servers — which remained at warehouse locations to mislead government inspectors.
Prosecutors allege the defendants deployed these fake machines during an inspection conducted by a U.S. export control official.
$2.5 Billion in Diverted Technology
The aggregate value of illegally exported equipment since 2024 totaled roughly $2.5 billion. Between late April 2025 and mid-May 2025 alone, conspirators allegedly diverted more than $510 million in server technology to China.
Liaw, whose holdings in Super Micro stock are valued at approximately $464 million per FactSet data, was taken into custody Thursday. Sun was also arrested. Chang remains at large.
Federal prosecutors allege Liaw actively advocated for transitioning the operation toward more advanced technology. Text message evidence presented in the indictment shows him inquiring with a contact at the Southeast Asian intermediary about monthly capacity for Nvidia’s B200 processors — built on the Blackwell platform — beginning in early 2025.
In another communication, Liaw allegedly forwarded a link to a White House press release announcing forthcoming AI export restrictions and urged expedited shipments before implementation.
When a business associate sent Liaw news coverage about Chinese citizens arrested for AI chip smuggling, he reportedly responded using crying face emojis.
Nvidia Issues Statement
Nvidia, whose graphics processing units powered the servers central to this case, emphasized that export regulation compliance remains a critical company priority. The chipmaker 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 said, adding that it provides no service or support for such systems.
The specific chip models were not explicitly identified in court filings. Nevertheless, Nvidia commands dominant market share in AI accelerators, and its products have been subject to stringent U.S. export restrictions targeting China since 2022.
In 2024, Super Micro revealed that its auditing firm Ernst & Young had resigned from the engagement. The company subsequently engaged BDO as replacement auditor. According to the indictment, Chang allegedly arranged for what he characterized as a “friendly” auditor to inspect data center operations connected to the smuggling network.
U.S. Attorney Jay Clayton, the Trump-appointed prosecutor who previously chaired the SEC, stated: “Crimes involving sensitive technology must be met with swift action, otherwise the law is meaningless.”
