FBI Charges Super Micro Insiders for Using Fake Documents and Shell Companies to Send Nvidia Chips to China

The Federal Bureau of Investigation (FBI) arrested a co-founder of Super Micro Computer Inc. (SMCI) on Thursday for allegedly leading a scheme that used fabricated documents, dummy servers, and a Southeast Asian pass-through company to funnel billions of dollars' worth of restricted AI servers packed with Nvidia chips to buyers in China.

Yih-Shyan 'Wally' Liaw, 71, who co-founded the San Jose-based server maker in 1993 and served on its board as Senior Vice President of Business Development, was taken into custody in California and later released on bail.

Ting-Wei 'Willy' Sun, 44, a third-party contractor described by prosecutors as a 'fixer', was also arrested and is being held pending a detention hearing.

A third defendant, Ruei-Tsang 'Steven' Chang, 53, who served as general manager of Super Micro's Taiwan office, remains a fugitive.

How the Scheme Allegedly Worked

According to the indictment unsealed in Manhattan federal court, the three men directed executives at an unnamed Southeast Asian company to place purchase orders with Super Micro as if the servers were destined for that company's own operations.

The servers, often assembled in the US, were shipped to Super Micro's facilities in Taiwan, then delivered to the Southeast Asian firm. From there, a logistics company stripped the identifying packaging, placed the servers in unmarked boxes, and sent them to their true destination in China.

Between 2024 and 2025, the Southeast Asian company purchased roughly $2.5 billion (£1.9 billion) worth of Super Micro servers under this alleged arrangement, the Department of Justice (DOJ) said. In a single three-week window from late April to mid-May 2025, prosecutors allege at least $510 million (£380 million) worth of US-assembled servers were diverted to China.

Dummy Servers and Hair Dryers to Beat Audits

The concealment efforts went well beyond paperwork. To fool Super Micro's own compliance team, the defendants allegedly staged thousands of non-working replica servers at warehouses where the Southeast Asian company was supposed to be storing its purchases. The real servers had already been shipped to China.

Surveillance cameras captured Sun and an unnamed broker unboxing the fake servers, using a hair dryer to remove and reaffix serial-number stickers, then carefully repackaging them to pass inspection, the DOJ said. Those same dummy units were later used to try to deceive an audit by the US Department of Commerce.

The defendants allegedly coordinated the entire operation through encrypted messaging apps, discussing server quantities, delivery locations in China, and ways to hide the scheme from both US authorities and Super Micro's internal compliance team.

SMCI Responds as Stock Drops Nearly 12%

Super Micro Computer is not a defendant in the case. The company said in a statement that it has placed Liaw and Chang on administrative leave, terminated its relationship with Sun, and is cooperating with the government investigation.

'The conduct by these individuals alleged in the indictment is a contravention of the company's policies and compliance controls,' the statement said.

Shares of SMCI fell roughly 11.85% in after-hours trading on Thursday, dropping to $27.14 (£20.25) from a close of $30.79 (£22.97). The stock has already lost more than 23% over the past year.

The Biggest Chip Export Enforcement Action Yet

The case is one of the most significant enforcement actions in Washington's effort to stop advanced AI technology from reaching China. US export controls on high-performance AI chips and the servers that house them have been in place since October 2022, first imposed under President Joe Biden and maintained under President Donald Trump.

US Attorney Jay Clayton called such diversion schemes 'a direct threat to US national security.' Each defendant faces up to 20 years in prison on the most serious charge of conspiring to violate the Export Controls Reform Act, plus additional counts of conspiracy to smuggle goods and defraud the US.

For investors holding SMCI or Nvidia stock, the case raises pressing questions about whether America's most sensitive AI technology can actually be kept out of China, and how many other supply chain leaks remain undiscovered.