Super Micro Executives Charged with Smuggling $2.5 Billion in AI Technology to China

Three individuals linked to Super Micro Computer Inc., including a co-founder, have been charged with illegally exporting at least $2.5 billion worth of U.S. Artificial intelligence (AI) technology to China, the U.S. Justice Department announced on Thursday. The scheme involved circumventing U.S. Export restrictions imposed on advanced AI chips since 2022.

Details of the Scheme

Yih-Shyan Liaw, Ruei-Tsang Chang, and Ting-Wei Sun are accused of a complex operation to smuggle servers manufactured in the U.S. Through Taiwan and other Southeast Asian countries. These servers were then repackaged in neutral boxes and shipped to China. Prosecutors allege the defendants took extensive measures to conceal their activities from both the U.S. Manufacturers and export control authorities.

The indictment details how workers allegedly used hair dryers to remove labels and serial numbers from genuine servers, replacing them with those from non-functional replicas – “dummy” servers – for inspection purposes. This allowed the real servers to be shipped to China undetected. Between April 2025 and mid-May 2025, servers valued at over $500 million were reportedly redirected to China.

Individuals Involved

Yih-Shyan Liaw, a co-founder of Super Micro who joined its board of directors in 2023, and Ting-Wei Sun, a Taiwanese citizen, were arrested on Thursday. Ruei-Tsang Chang, also a Taiwanese citizen, remains at large. Liaw was a well-known figure in Silicon Valley, frequently interacting with executives from major tech companies like Nvidia, Intel, and Micron Technology.

Super Micro has stated that Liaw and Chang have been placed on leave, and ties with Sun have been severed. The company has cooperated with investigators and was not named as a defendant in the indictment.

Industry Response

Nvidia, a major supplier of AI chips to Super Micro and other server manufacturers, emphasized its commitment to strict compliance with export laws. A spokesperson stated that the company works closely with customers and the government on compliance programs and does not provide service or support for illegally redirected systems. Nvidia noted that enforcement mechanisms are strong and effective.

Reuters previously reported in 2024 that China had obtained banned Nvidia chips through Super Micro servers.

Impact and Ongoing Investigation

Shares of Super Micro fell 8% in after-hours trading following the news. The Justice Department’s investigation is ongoing, and the case highlights the increasing scrutiny of technology exports to China amid concerns over national security and technological competition.