Supermicro's co-founder was just accused of smuggling $2.5 billion in GPUs to China

Federal agents arrested Yih-Shyan “Wally” Liaw, Supermicro co-founder and senior vice president, on charges of orchestrating a $2.5 billion scheme to smuggle AI servers packed with high-end Nvidia chips into China.

The 71-year-old Silicon Valley executive, a longtime confidante of CEO Charles Liang, faces indictment alongside Supermicro’s Taiwan general manager Ruei-Tsang “Steven” Chang (a fugitive) and fixer Ting-Wei “Willy” Sun (also arrested Thursday). Supermicro Chairman and CEO Charles Liang was not named in the indictment, the company said in a statement.

From 2024 through 2025, Liaw allegedly directed executives at an unnamed Southeast Asian company to place massive orders with Supermicro, claiming the servers were for local use. The machines were assembled in the U.S., shipped to Taiwan, then rerouted through a logistics chain that stripped identifying packaging and delivered them unmarked to China.

The conspiracy involved faking documents, staging thousands of dummy servers with re-applied serial stickers to deceive audits, and using encrypted apps to coordinate quantities and Chinese delivery locations.

During a three-week span from late April to mid-May 2025 alone, roughly half a billion dollars in servers reached China.

The DOJ indictment states the servers targeted Nvidia GPUs restricted under U.S. export controls since 2022 to prevent advanced AI hardware from reaching Chinese military and state entities.

Each defendant faces up to 20 years on the most serious charge of conspiracy to violate the Export Controls Reform Act, plus additional smuggling and fraud counts.

Supermicro placed Liaw and Chang on administrative leave and fired Sun, stating the conduct violated company policies while insisting the firm itself is cooperating with investigators.

Supermicro stock dropped roughly 12% in after-hours trading following the news.