The U.S. Attorney's Office for the Southern District of New York has charged several executives from Super Micro with allegedly using fraudulent compliance methods to illegally ship $2.5 billion worth of Nvidia servers to China. These executives are now facing federal lawsuits.
This incident has drawn the attention of the U.S. government, which is calling for a thorough investigation into the potential channels through which individuals supply Nvidia chips to the Chinese market. This move could impact Chinese companies, such as DeepSeek, in developing their AI technologies and competing with American tech giants like OpenAI and Anthropic.
According to reports, the U.S. government has claimed in legal documents that Yih-Shyan “Wally” Liaw, Ruei-Tsan “Steven” Chang, and Ting-Wei “Willy” Sun conspired to violate the Export Control Reform Act.
Smuggling of Nvidia Chips to China Becomes a Focus for the U.S.
U.S. federal prosecutors have brought serious charges against executives from several American tech companies, accusing them of violating export laws by illegally transferring Nvidia AI chips to China.
Notably, this smuggling activity occurred after the U.S. Department of Commerce officially announced in October 2022 a ban on supplying advanced Nvidia AI chips to China. The rationale for this ban was national security concerns, fearing that these chips could be used for military purposes.
As a result, a black market for critical AI technology components has emerged. In this market, intermediaries use false documents, shell companies, and complex shipping routes to illegally transport restricted chips to China.
Nvidia has become a significant player in the international AI chip market, with its H100 and A100 processors being crucial for training large language models and other applications, leading to high demand for its products.
Yih-Shyan “Wally” Liaw is one of the co-founders of Super Micro Computer, Inc., holding shares in the company worth $464 million. When approached by reporters regarding the matter, he declined to comment.
In response to media inquiries, Super Micro stated that while the company is not a defendant in this case, Liaw serves as the Senior Vice President of Business Development, Chang is the Sales Manager based in Taiwan, and Sun is a contractor.
However, sources familiar with the situation revealed anonymously that the company has terminated its contract with Sun and has suspended the aforementioned employees.
Following the announcement of the indictment, Super Micro's stock price fell by 12% in after-hours trading. The indictment noted that a Southeast Asian company acted as an intermediary, forging documents to falsely claim that these servers were being used, while in reality, they were repackaged by logistics partners and shipped to China.
Court documents indicate that sources said the defendants attempted to deceive Super Micro's compliance team by storing “counterfeit” servers at the Southeast Asian company while sending the actual servers directly to China and pressuring compliance personnel to approve the shipment.
Super Micro generated approximately $2.5 billion in revenue from this business.