The US Justice Department’s indictment of Yih-Shyan “Wally” Liaw, Super Micro Computer’s co-founder and Senior Vice President of Business Development, for allegedly orchestrating the smuggling of at least $2.5 billion in Nvidia GPU-powered servers to China is the most high-profile AI export control enforcement action since the Biden administration first imposed chip restrictions in 2022.
US Attorney Jay Clayton for the Southern District of New York described the scheme in blunt terms: “As alleged in the indictment, the defendants participated in a systematic scheme to divert massive quantities of servers housing U.S. artificial intelligence technology to customers in China. They did so through a tangled web of lies, obfuscation, and concealment — all to drive sales and generate revenues in violation of U.S. law. Diversion schemes like those disrupted today generate billions of dollars in ill-gotten gains and pose a direct threat to U.S. national security.”
Liaw, sales manager Ruei-Tsang Chang and contractor Ting-Wei Sun are named as co-defendants, each facing up to twenty years in prison on the most serious charge of conspiracy to violate the Export Control Reform Act, along with additional counts of conspiracy to smuggle goods and defraud the United States government.
The indictment alleges the scheme routed US-assembled servers through a Southeast Asian intermediary company before delivering them to Chinese customers, with between late April 2025 and mid-May 2025 alone accounting for over $510 million of the transfers, according to the unsealed filing.
Super Micro issued a corporate statement confirming it was not named as a defendant and said it had cooperated with federal investigators, announcing simultaneously that it had placed Liaw and Chang on administrative leave and terminated its relationship with Sun.
The market’s response was immediate and severe, with SMCI shares plunging more than 20 percent in premarket trading and erasing more than $4 billion in market capitalisation, extending a year-to-date decline that already reflected the company’s history of accounting controversy.
Super Micro settled SEC charges of accounting fraud in 2020 for $17.5 million, faced fresh allegations of accounting manipulation from Hindenburg Research in 2024, and now carries this indictment as a third major credibility blow in less than a decade, a pattern that analysts covering the stock are finding increasingly difficult to contextualise as coincidence.
The Nvidia connection represents an additional layer of complexity for both companies, with SMCI analysts at one firm noting openly that “we wonder if Nvidia might feel the need to further distance themselves from SMCI,” which, if acted upon, would cut off SMCI’s primary GPU supply and devastate the company’s core business model.
The DOJ’s next moves will determine whether this remains an individual-level prosecution or escalates into a corporate-level investigation, and the company’s cooperation claim will be tested against whatever prosecutors have gathered in the course of the investigation.