The U.S. Attorney’s Office for the Southern District of New York has charged associates of an unidentified U.S. server maker with illegally embezzling billions of dollars in Nvidia-servers powered in China.
The U.S. government has been trying to figure out how high-powered chips reached China without permission, as American artificial intelligence companies such as Anthropic and OpenAI face challenges from DeepSeek and other Chinese rivals.
In an indictment unsealed Thursday, the U.S. government alleged that Yih-Shyan “Wally” Liaw, Ruei-Tsan “Steven” Chang and Ting-Wei “Willy” Sun worked together to violate the Export Control Reform Act.
The server company’s products containing Nvidia chips “are subject to strict United States export controls, prohibiting their sale to China without a license,” the plaintiff said in the indictment. “These controls are in place to protect, among other things, the national security and foreign policy interests of the United States.”
Liaw is co-founder of the server maker Super microcomputer and member of its board of directors. He controls $464 million in Super Micro stock, according to FactSet. He did not respond to a request for comment.
Super Micro shares fell 25% Friday after a federal court unsealed the indictment.
Super Micro said that while the company is not named as a defendant, Liaw works as senior vice president of business development, Chang is Taiwan sales director and Sun is an entrepreneur. The company furloughed the employees and ended its relationship with the contractor.
Liaw and Sun were both arrested Thursday, while Chang is a fugitive, the prosecutor’s office said.
“The conduct of these individuals alleged in the indictment constitutes a violation of the Company’s policies and compliance controls, including efforts to circumvent applicable export control laws and regulations,” according to a statement. statement. “Supermicro maintains a robust compliance program and is committed to fully complying with all applicable U.S. export and re-export control laws and regulations.”
Read more CNBC tech newsA Southeast Asian company, acting as a middleman, compiled false documents making it appear that it would use the servers and had a separate logistics company repackage the servers to conceal them before traveling to China, according to the indictment.
The defendants attempted to deceive the server maker’s compliance team with “dummy” servers in the company’s Southeast Asian storage facilities, when the real servers had already been shipped to China, and pressured the compliance team to approve the shipments, according to the indictment. The defendants also allegedly employed “dummy” servers during a visit from a U.S. export control officer.
These efforts have generated approximately $2.5 billion in sales for the server maker since 2024, with servers sold for $510 million between late April 2025 and mid-May 2025 destined for the Southeast Asian company and then China, the indictment says. The plaintiff said the server maker did not have a license from the U.S. Department of Commerce to export servers powered by Nvidia GPUs to China.
Chang worked to prevent auditors from inspecting parts of the data centers where the Southeast Asian company was supposed to keep servers that had actually gone to China, and he arranged for an auditor he described as “friendly” to conduct the examination, the indictment says. In 2024, Super Micro said its auditor, Ernst & Young, had resignedand later brought BDO as a replacement.
Nvidia’s graphics processing units are in demand worldwide for training generative AI models.
President Donald Trump initially sought to block China from obtaining the processors. But in December, he said he told Chinese President Xi Jinping that the United States would allow Nvidia to ship H200 GPUs to China “under conditions that maintain strong national security.”
Earlier this week, Nvidia CEO Jensen Huang said the chipmaker was restart of manufacturing to fulfill purchase orders for H200 from China.
Last summer, Nvidia had received licenses to export the H20 chip to China, with Huang agreeing to supply the United States with 15% of its sales in China.
Prosecutors alleged that Liaw pushed the Southeast Asian company to adopt a more advanced chip, the B200, which uses Nvidia’s Blackwell architecture, in late 2024.
“Approximately how many can you take between now and January? February? March? April?” Liaw wrote in a text message to an executive at the Southeast Asian company. “A rough forecast will suffice… Then we can propose [Nvidia] with the way they can accept… It’s the only way to have [Nvidia] to promise the allocation of B200, to the best of my knowledge.”
In 2025, Liaw sent the Executive Branch a link to a White House statement regarding an export rule for AI products to be signed into law later that year, saying the pace of shipments should increase before the effective date, according to the indictment.
When a broker who had purchased Nvidia servers from the Southeast Asian company sent Liaw a text message with a link to an announcement about the arrest of Chinese nationals for smuggling AI chips into China, Liaw reportedly responded with sobbing emojis.
“Crimes involving sensitive technology must be suppressed with swift action,” Jay Clayton, Trump-appointed U.S. Attorney for the Southern District of New York and former chairman of the Securities and Exchange Commission, was quoted as saying in a statement. statement. “Otherwise the law makes no sense.”