The U.S. Attorney’s Office for the Southern District of New York has charged Supermicro co-founder Yih-Shyan “Wally” Liaw, Taiwan general manager Ruei-Tsang “Steven” Chang, and a third-party contractor named Ting-Wei “Willy” Sun with conspiring to smuggle Nvidia-powered servers to China in violation of U.S. export controls, according to an indictment unsealed Thursday.
Supermicro shares fell 25% on Friday. Liaw controls $464 million worth of Super Micro shares, according to FactSet.
The Scheme
The indictment describes a multi-year operation running since 2024 that generated approximately $2.5 billion in server sales. A Southeast Asian company acted as a middleman, compiling fake paperwork to appear as the end user. A separate logistics firm repackaged the servers to conceal their destination before forwarding them to China, as reported by CNBC.
Between late April and mid-May 2025 alone, servers worth $510 million were sold to the Southeast Asian front company and routed onward to China, according to NBC News. Supermicro had no U.S. Commerce Department license to export servers containing Nvidia GPUs to China.
The defendants allegedly used “dummy” servers at the Southeast Asian company’s storage facilities to fool Supermicro’s compliance team and pressured internal auditors into approving shipments. During a visit from a U.S. export control officer, the defendants also employed dummy servers as decoys, according to the indictment.
Chang reportedly worked to prevent auditors from inspecting parts of data centers where the real servers were stored. Bloomberg identified Liaw as a Supermicro co-founder and board member. Fortune reported that Chang remains a fugitive.
Supermicro’s Response
Supermicro said the company is not named as a defendant. In a statement, Supermicro said the alleged conduct “is a contravention of the Company’s policies and compliance controls.” Liaw and Chang have been placed on leave. The company ended its relationship with Sun, the contractor.
“Supermicro maintains a robust compliance program and is committed to full adherence to all applicable U.S. export and re-export control laws and regulations,” the statement reads.
Why It Matters for the AI Industry
The charges land during the same week Nvidia showcased NemoClaw and its Vera CPU at GTC 2026, and as OpenClaw’s adoption surges across China. The fundamental tension: China’s tech sector is racing to deploy AI agents at scale, and those agents need compute infrastructure powered by the same Nvidia chips that U.S. export controls are designed to restrict.
The $2.5 billion alleged smuggling volume indicates that demand for restricted compute in China is measured in billions, not millions, and that the enforcement infrastructure has struggled to keep pace. The indictment’s description of dummy servers, fake end-user paperwork, and repackaging operations suggests a level of operational sophistication that goes well beyond opportunistic evasion.
For Nvidia, the charges complicate an already delicate position. The company designs the chips but relies on server manufacturers like Supermicro and their distribution networks to enforce export compliance. When a co-founder of a key distribution partner allegedly runs the smuggling operation, the entire compliance model comes into question.