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A senior vice president of Super Micro Computer Inc. and two others affiliated with the company have been charged with conspiring to smuggle billions of dollars of computer servers containing advanced Nvidia chips to China, violating U.S. export control laws.
Federal prosecutors in Manhattan have charged a senior vice president of Super Micro Computer Inc., Yih-Shyan 'Wally' Liaw, and two other affiliates, Ting-Wei 'Willy' Sun and Ruei-Tsang 'Steven' Chang, with conspiring to illegally smuggle billions of dollars worth of computer servers containing sophisticated Nvidia chips to China. The indictment, announced on Thursday, alleges that these individuals deliberately bypassed U.S. export control laws between 2024 and 2025 by diverting high-performance servers, assembled in the United States, to Chinese entities. This scheme involved directing executives of a Southeast Asian company to place orders for approximately $2.5 billion worth of servers from the U.S.-based manufacturer, Super Micro Computer.
FBI Assistant Director in Charge James C. Barnacle Jr. highlighted the deceptive methods employed by the defendants to execute their illicit operation. These tactics included the use of fabricated documents, staging fraudulent audit inventories, and leveraging a pass-through company to obscure their true intentions and the actual recipients of the servers. U.S. Attorney Jay Clayton emphasized the gravity of such schemes, stating that they 'pose a direct threat to U.S. national security.' The deliberate circumvention of export controls on advanced technology is seen as a serious breach that undermines national interests.
The core of the smuggled technology comprises Nvidia's advanced processors, which are fundamental components for data centers essential to powering artificial intelligence (AI). AI is recognized as a transformative technology with the potential to significantly reshape global society and alter the balance of power among nations. This understanding fuels an intense rivalry between the United States and China, reminiscent of historical arms races, as both nations vie for dominance in AI development. The U.S. government views control over these critical AI components as vital to maintaining its technological and strategic advantage.
To prevent China from gaining an edge in AI, the U.S. government, under President Joe Biden, has imposed stringent restrictions on the sale of Nvidia’s advanced AI chips to China. These prohibitions were largely maintained from policies initiated by the Trump administration, particularly concerning the most powerful processors. While the Trump administration did allow some loosening of the ban on lower-tier AI chips to China in exchange for a 15% commission, Nvidia's most recent financial reports did not account for any China sales in their revenue forecasts, indicating the severity and impact of these ongoing restrictions. Both the government and companies like Nvidia are navigating a complex regulatory environment where compliance is paramount.
Among those charged, Yih-Shyan 'Wally' Liaw, a 71-year-old U.S. citizen holding a senior vice president and board member position at Super Micro Computer, was arrested in California. Also apprehended was Ting-Wei 'Willy' Sun, 44, a company contractor and Taiwanese citizen. However, Ruei-Tsang 'Steven' Chang, a sales manager for Super Micro Computer based in Taiwan, remains at large as a fugitive. Liaw has been released on bail, while Sun awaited a bail hearing. The legal proceedings are underway, with the authorities continuing their efforts to bring all alleged conspirators to justice and to clarify the full extent of their involvement in the smuggling ring.
The indictment details a vast and escalating smuggling operation, with initial orders for servers from Super Micro Computer totaling $2.5 billion between 2024 and 2025. Over time, the scheme became increasingly audacious, resulting in at least $510 million worth of servers being illicitly diverted to China after their assembly in the United States. Following the charges, Super Micro Computer Inc. issued a statement acknowledging the arrested individuals' affiliations with the company. The company clarified that the alleged conduct contravenes its internal policies and compliance controls, emphasizing its commitment to adhering to all U.S. export laws and its full cooperation with the government's investigation, despite not being indicted itself. Nvidia also reiterated its commitment to 'strict compliance' with export regulations, underscoring the rigorous enforcement mechanisms in place to prevent unlawful diversion of controlled technology.
Despite the significant U.S. export restrictions on AI chips to China, Nvidia has experienced an extraordinary period of growth and market expansion. Over a three-year span, the company's market value has surged from approximately $400 billion at the close of 2022 to an astounding $4.3 trillion today, establishing it as one of the most valuable companies globally. Nvidia CEO Jensen Huang recently projected a continued boom in AI, anticipating a $1 trillion backlog in chip orders, which would double the estimate from just a year prior. This robust performance indicates that even with market limitations in China, the global demand for AI processing power continues to drive Nvidia's unprecedented success and market dominance.