By Kanishka Singh, Karen Freifeld and Stephen Nellis
WASHINGTON, March 19 (Reuters) – Three people associated with artificial intelligence server maker Super Micro Computer Inc, including its co-founder, were charged with helping smuggle at least $2.5 billion of U.S. AI technology to China in violation of export laws, the U.S. Justice Department said on Thursday.
U.S. prosecutors did not name Super Micro in the complaint, referring only to a “U.S. manufacturer.” San Jose, California-based Super Micro said it was informed by federal prosecutors of the indictment on Thursday. It noted that the company itself was not named as a defendant in the case and said it had cooperated with investigators.
The Justice Department said it had charged Yih-Shyan Liaw, Ruei-Tsang Chang, and Ting-Wei Sun in an indictment unsealed in federal court in Manhattan on Thursday, on allegations of a complex scheme to send U.S.-made servers through Taiwan to other countries in Southeast Asia, where they were swapped into unmarked boxes and sent onward to China. The U.S. has had export restrictions on China for advanced AI chips since 2022.
Liaw co-founded Super Micro in 1993, and joined its board of directors in 2023. Chang was a sales manager in the Taiwan office of Super Micro, while Sun was a contractor.
U.S. officials allege the three took extensive measures to conceal their activity both from the U.S.-based makers of the servers and U.S. export control officials, even using hair dryers to remove labels and serial numbers from the real machines and placing them on dummy machines left behind after the real machines had been shipped to China.
The company said it placed Liaw and Chang on leave and terminated its ties with Sun, who was a contractor, after being made aware of the charges on Thursday. Super Micro’s shares fell 8% in after hours trading following the news.
‘BRAZEN’ SCHEME
U.S. officials also did not name which chips were involved in the alleged scheme, but Nvidia dominates the market for AI chips and its offerings command some of the highest prices.
In a statement, Nvidia, which sells chips to Super Micro and other server makers, said that “strict compliance” with export laws is a top priority
“We continue to work closely with our customers and the government on compliance programs as export regulations have expanded,” an Nvidia spokesperson said. “Unlawful diversion of controlled U.S. computers to China is a losing proposition across the board—NVIDIA does not provide any service or support for such systems, and the enforcement mechanisms are rigorous and effective.”
Nvidia did not immediately respond to a question about whether the company was aware of the alleged smuggling activity.
Reuters in 2024 reported that China acquired banned Nvidia chips in Super Micro servers, among others.
Prosecutors said the alleged co-conspirators took servers that were assembled in the United States and shipped them to facilities in Taiwan, both locations where Super Micro has facilities.
From there, prosecutors allege, the servers were sent to other countries in Southeast Asia, where they were put in unmarked boxes before being sent to China.
Prosecutors allege the co-conspirators worked to deceive the U.S. manufacturer’s compliance teams by staging thousands of “dummy” servers – non-working replicas of the actual computers – for inspection, when the real servers had been shipped to China. The DOJ said surveillance video showed workers using hair dryers to remove labels from the real servers and put them on dummy servers.
“The defendants’ scheme became more brazen over time and resulted in massive quantities of servers with controlled U.S. artificial intelligence technology being sent to China,” the Justice Department said in a statement, saying that more than half a billion dollars worth of servers were diverted to China between April 2025 and mid-May 2025.
The DOJ said Liaw, a U.S. citizen, and Sun, a citizen of Taiwan, were arrested on Thursday while Chang, a citizen of Taiwan, remains a fugitive.
LIAW WELL KNOWN IN SILICON VALLEY
Liaw, in particular, was well-known in Silicon Valley, where Super Micro builds computers using chips from some of the region’s biggest firms such as Nvidia, Intel and Advanced Micro Devices. According to postings on his LinkedIn profile, he actively welcomed customers to the company’s headquarters and attended a groundbreaking ceremony for one of Micron Technology’s new factories and met with Micron CEO Sanjay Mehrotra, according to photographs posted on LinkedIn.
On Monday, Nvidia CEO Jensen Huang walked the floor of Nvidia’s massive developer conference meeting and meeting executives from key partners such as Samsung Electronics Co Ltd and SK Hynix. When Huang stopped at Super Micro’s booth to shake hands with Super Micro co-founder and CEO Charles Liang, Liaw was standing nearby, according to a photograph posted by Super Micro on social media platform X.
Liaw did not respond to an emailed request for comment at his Super Micro address or a call at a phone number listed for him.
“The conduct by these individuals alleged in the indictment is a contravention of the company’s policies and compliance controls, including efforts to circumvent applicable export control laws and regulations,” Super Micro said.
(Reporting by Kanishka Singh in Washington, additional reporting by Karen Freifeld and Maria Tsvetkova; Editing by Michelle Nichols and Lincoln Feast.)
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