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Supermicro’s co-founder and two others working for the company have been charged in New York for allegedly violating US export controls by smuggling $2.5bn of Nvidia’s AI chip servers to Chinese customers.
The US attorney’s office for the Southern District of New York said Wally Liaw, a co-founder and member of Supermicro’s board of directors, conspired with a Taiwan-based Supermicro employee and a contractor to co-ordinate illegal shipments of chips to China.
The announcement by New York’s top federal prosecutor Jay Clayton following an FBI investigation is by far the largest case yet by US law enforcement claiming that Nvidia’s chips are being smuggled into China via employees at one of its biggest server partners.
Supermicro shares fell 12 per cent in after-hours trading on Thursday.
Liaw, who served as senior vice-president of business development, and the contractor Willy Sun have been arrested. Steven Chang, a Supermicro sales manager in Taiwan and a Taiwanese citizen, “remains a fugitive”, the US Department of Justice said in a press release.
Liaw, Sun and Chang could not be reached for comment.
Supermicro is not named as a defendant in the indictment unveiled on Thursday. The $18.5bn company packages Nvidia’s AI chips into servers for sale to customers including US tech groups.
The case comes as Nvidia is poised to start shipping its older but powerful H200 chips to China after a breakthrough deal with the Trump administration in December.
Successive US administrations have clamped down on Nvidia’s ability to sell its AI chips to China — something that chief executive Jensen Huang has lobbied heavily against.
“Supermicro maintains a robust compliance programme and is committed to full adherence to all applicable US export and re-export control laws and regulations,” said Supermicro, adding that it had placed its employees on administrative leave and severed its relationship with the contractor.
Nvidia said “strict compliance” was a “top priority” for the company and that the “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,” the company added.
Huang has previously dismissed warnings that the company’s chips enter China illegally, saying there was no evidence of large-scale chip diversion despite an FT report last year that large numbers of its restricted chips were entering the country.
Prosecutors said the defendants used a company based in south-east Asia as a “pass-through entity” to ship Nvidia chips from Taiwan to China using third-party brokers. The scheme included repackaging Supermicro’s servers and placing them in unmarked boxes to conceal their contents.
This resulted in the pass-through entity becoming one of Supermicro’s largest customers, accounting for $99.7mn in revenue in the final quarter of its 2024 financial year, according to the indictment.
More than $510mn of Nvidia servers assembled in the US were diverted to China between late April 2025 and mid-May 2025, it added.
Supermicro has been recovering from an auditing scandal in 2024 that led to delayed financial releases. Its chief financial officer was later replaced. An independent probe found no evidence of fraud.
The investigation revealed on Thursday marks the latest chip smuggling probe after two Chinese nationals in Los Angeles were arrested in August last year for shipping Nvidia chips to China.
In December, Texas law enforcement arrested two businessmen for allegedly smuggling Nvidia’s AI chips into China, seizing $50mn in Nvidia technology as well as cash.
Chris McGuire, a technology and security expert at the Council on Foreign Relations, said it was “extremely concerning” that a senior executive from a big US company involved in AI was “actively enabling, and profiting from, China’s violation of US export controls”.
“This shows that chip companies simply can’t be trusted to police themselves,” said McGuire, who worked on export controls as a senior White House and state department official during the Biden administration. “Contrary to the claims of some in the industry, AI chip smuggling is a major problem and it needs to stop.”
Additional reporting by Kaye Wiggins in New York and Demetri Sevastopulo in Washington