Three people associated with artificial intelligence (AI) server maker Super Micro Computer Inc, including its cofounder, were charged with helping smuggle at least US$2.5 billion of US AI technology via Taiwan to China in contravention of export laws, the US Department of Justice said yesterday.
US prosecutors did not name Super Micro in the complaint, referring only to a "US manufacturer." San Jose, California-based Super Micro said that federal prosecutors informed it of the indictment yesterday.
The company itself was not named as a defendant in the case, it said, adding that it had cooperated with investigators.
Photo: Ann Wang, Reuters
The department said that it had charged Liaw Yih-shyan (廖益賢), Chang Ruei-tsang (張瑞滄), and Sun Ting-wei (孫廷瑋) in an indictment unsealed in federal court in Manhattan yesterday, on allegations of a complex scheme to send US-made servers through Taiwan to other countries in Southeast Asia, where they were swapped into unmarked boxes and sent onward to China.
The US has had export restrictions on China for advanced AI chips since 2022.
Liaw cofounded 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.
US officials allege the three took extensive measures to conceal their activity from the US-based makers of the servers and US 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.
Super Micro 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 yesterday.
The company's shares fell 8 percent in after-hours trading following the news.
US officials did not name which chips were involved in the alleged scheme, but Nvidia Corp 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 US 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 from Super Micro servers, among others.
Prosecutors said the alleged coconspirators took servers that were assembled in the US and shipped them to facilities in Taiwan, both locations where Super Micro has facilities.
From there, the servers were sent to other countries in Southeast Asia, where they were put in unmarked boxes before being sent to China, prosecutors said.
The coconspirators worked to deceive the US 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, prosecutors said.
Surveillance video footage showed workers using hair dryers to remove labels from the real servers and putting them on dummy servers, the department said.
"The defendants’ scheme became more brazen over time and resulted in massive quantities of servers with controlled US artificial intelligence technology being sent to China," the department said in a statement.
More than US$500 million worth of servers were diverted to China between April and mid-May last year, it added.
Liaw, a US citizen, and Sun, a Taiwanese citizen, were yesterday arrested, while Chang, a Taiwanese citizen, remains a fugitive, the department said.
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 Corp and Advanced Micro Devices Inc.
He actively welcomed customers to the company's headquarters, attended a groundbreaking ceremony for one of Micron Technology's new factories and met with Micron CEO Sanjay Mehrotra, posts on his LinkedIn profile showed.
On Monday, Nvidia CEO Jensen Huang (黃仁勳) walked the floor of Nvidia's massive developer conference meeting and met executives from key partners such as Samsung Electronics Co and SK Hynix Inc. When Huang stopped at Super Micro's booth to shake hands with Super Micro cofounder and CEO Charles Liang (梁見後), Liaw was standing nearby, a photograph posted by Super Micro on X showed.
Liaw did not respond to an e-mailed 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.
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