Three men, including a senior vice president of Super Micro Computer Inc., have been charged with conspiring to smuggle billions of dollars worth of computer servers that contain advanced Nvidia chips to China.
The indictment filed in Manhattan federal court outlines how the defendants allegedly violated U.S. export control laws by attempting to divert large quantities of high-performance servers assembled in the United States to China between 2024 and 2025.
According to FBI Assistant Director James C. Barnacle Jr., the individuals used forged documents, set up false equipment to pass audits, and employed a pass-through company to hide their illegal activities and the identities of their clients.
U.S. Attorney Jay Clayton emphasized that schemes of this nature represent a significant threat to national security.
Nvidia's processors have become critical for data centers that facilitate artificial intelligence technologies, a rapidly evolving field that could dramatically alter global dynamics. The competition between the U.S. and China for superiority in AI has drawn parallels to the historical arms race during World War II between the U.S. and Germany over nuclear weapon development.
To counter this competition, President Joe Biden's administration has imposed restrictions on the sale of Nvidia's AI chips to China, a prohibition that was initially established under former President Donald Trump. The Trump administration had started to ease some restrictions on lower-tier AI chips in exchange for a commission to the U.S. government, yet Nvidia did not anticipate any sales to China in its latest revenue forecasts.
The three individuals charged are Yih-Shyan “Wally” Liaw, 71, a U.S. citizen and senior vice president of Super Micro Computer, who was arrested in California, and Ting-Wei “Willy” Sun, 44, a contractor for the company. Ruei-Tsang “Steven” Chang, a sales manager in Taiwan, remains at large. Liaw was released on bail, while Sun awaits a bail hearing, with no immediate representation known for either.
The indictment alleges that Liaw and Chang directed a Southeast Asian company to order $2.5 billion worth of servers from Super Micro Computer between 2024 and 2025.
As time progressed, the operation reportedly grew bolder, with at least $510 million worth of servers being diverted to China after assembly in the U.S.
While the indictment did not disclose the name of the Southeast Asian company involved, Super Micro Computer Inc. confirmed its affiliation with the arrested individuals in a statement issued late Thursday.
The company stated, “The actions of these individuals, as alleged in the indictment, are in violation of the Company’s policies and compliance controls, which are designed to adhere to export control laws and regulations.” They also asserted their commitment to cooperating fully with the ongoing investigation.
Nvidia responded to the allegations by reiterating that maintaining strict compliance with regulations is a top priority. They emphasized their collaboration with customers and government entities to ensure adherence to expanding export regulations, firmly stating that the illegal diversion of controlled U.S. technology to China is a detrimental path, as the company does not provide support for such systems.
Despite the restrictions on sales to China, Nvidia’s market value has skyrocketed, rising from approximately $400 billion at the end of 2022 to $4.3 trillion today, making it the most valuable company globally.
Earlier in the week, Nvidia CEO Jensen Huang projected optimism regarding the AI sector, forecasting a $1 trillion backlog in chip orders, which is double his previous estimate from a year before.
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Source: SecurityWeek News