- Three men have been charged with exporting restricted AI chips to China
- The men were employees of Super Micro Computer Inc.
- The plan racked up $2.5 billion in sales, circumventing restrictions on the power of AI GPUs.
A federal investigation was launched after the US Department of Justice charged three people with allegedly smuggling restricted Nvidia artificial intelligence chips to China.
The three men were not named in court documents, however, a statement issued by Super Micro Computer Inc. identified those involved.
The smuggling allegedly occurred between 2024 and 2025, and billions of dollars worth of computer servers containing advanced Nvidia traveled to China.
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The intellectual authors of the $2.5 billion plan
Of the three men accused, two have been arrested. Yih-Shyan “Wally” Liaw, senior vice president and board member of Supermicro, was arrested in California, while Ting-Wei “Willy” Sun, a Supermicro contractor based in Taiwan, was also detained. The third man, Ruei-Tsang “Steven” Chang, worked for Supermicro’s Taiwan office and is currently on the run.
Supermicro issued a statement regarding the arrest of the three men. “The conduct of these individuals alleged in the indictment is a contravention of the Company’s compliance policies and controls, including efforts to circumvent applicable export control laws and regulations,” the company said. “Supermicro maintains a robust compliance program and is committed to full compliance with all applicable U.S. export and re-export control laws and regulations.”
The smuggling scheme reportedly racked up $2.5 billion in sales, and the trio managed to divert more than $510 million worth of Supermicro servers to China. The servers were allegedly ordered by a Southeast Asian “streaming” company (referred to in the indictment as Company-1) to appear as legitimate transactions, before being repackaged and shipped to China.
Supply China with cutting-edge technology
The Supermicro servers largely contained Nvidia H100 and H200 Tensor Core GPUs, which are specifically designed for training and handling large language models (LLM).
The indictment further claims that to keep China supplied with the latest technologies, Liaw allegedly pushed for larger orders from Company-1, including servers containing Nvidia’s B200, one of the most advanced GPUs at the time.
The height of the US-China chip war
The United States has imposed restrictions on the types of GPUs that companies can export to China since October 2022. The main goal of these restrictions was to maintain US superiority in AI development while preventing China from building powerful models that could be used for decryption, autonomous weapons systems, and cyber warfare.
To monitor compliance with these restrictions, physical inspections were carried out to ensure that servers were not being smuggled into China. However, the three individuals allegedly organized “dummy” servers packaged with Supermicro labels and boxes, while the original contents of those same boxes were already being shipped to China.
Bypassing restrictions
As this case attests, export restrictions are only as good as your physical inspections. While the indictment does not explain the process of a physical inspection, it does state that an audit was conducted in August 2025. However, the indictment further claims that the person tasked with conducting the audit was allegedly off-site enjoying entertainment paid for by Company-1.
To complete the audit, Sun allegedly sent photos and videos of the fictitious servers, with their fake labels, to the auditor. The US Bureau of Industry and Security (BIS) later informed Supermicro that Company-1 was diverting its orders to China and that a second audit was scheduled. The second audit again involved fictitious servers and resulted in BIS suspending shipments from Company-1.
As of January 2026, restrictions on the export of H200 chips to China have been lifted, but there are requirements that customers ensure “sufficient security procedures,” and approved exports are subject to a 25% tax. However, B200 chips are still strictly prohibited.
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