Super Micro Executives Indicted for Smuggling AI Chips to China

U.S. Attorney Jay Clayton has filed criminal charges against SMCI associates for illegally diverting billions of dollars in servers to China.

Shares of Super Micro Computer Inc (NASDAQ: SMCI) opened 26% lower this morning following the publication of an unsealed indictment, in which the U.S. government alleges employees associated with the company violated export controls by illegally diverting billions worth of AI server equipment to China.

What’s the Scoop?

• Conspiracy Unsealed: According to a now unsealed grand jury indictment, which was initially filed Tuesday, beginning sometime around 2024, the U.S. government alleges that Yih-Shyan “Wally” Liaw (an SMCI co-founder, board member, and number three insider shareholder), Ruei-Tsan “Steven” Chang (the general manager of SMCI’s Taiwan sales office), and Ting-Wei “Willy” Sun (who SMCI acknowledges as a contractor) established a conspiracy to divert $2.5B of the company’s high-performance computer servers to China, in violation of U.S. export controls laws.
• Extensive Scheme: According to federal prosecutors, the defendants conspired to ship U.S.-assembled servers and technology to Taiwan, before shipping systems elsewhere in Asia, repackaging them unmarked boxes, and sending servers to their true final destinations in China. The co-conspirators (assisted by their extensive familiarity with SMCI’s auditing processes) allegedly employed extensive measures to conceal their scheme, including: falsifying data center lease documents and staging “dummy” servers to fool audit inspections when actual servers had been shipped to China.
• Company Confirms: SMCI has issued a statement acknowledging its relation to parties in the unsealed indictment, which points out the fact that the company itself was not a named defendant, and claims, “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.”

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