US authorities have arrested Super Micro Computer co-founder Yi-Shyan "Wally" Liau, charging him with smuggling AI chips worth $2.5 billion into China, according to a press release from the Department of Justice.
Other defendants include the general manager of Super Micro's Taiwan office, Jui-Tsan "Steven" Chang (currently wanted), and broker Ting-Wei "Willy" Sun (in custody).
According to investigators, the defendants misled inspectors, forged documents, and employed complex transit schemes using a middleman company to conceal the true destination of the AI chips.
“Such schemes generate billions in illegal profits and pose a direct threat to US national security,” stated Jay Clayton, the US Attorney for the Southern District of New York.
Authorities claim that the defendants and their associates conspired to systematically redirect servers from an American manufacturer containing specific GPUs to China without a license from the Department of Commerce. The scheme operated as follows:
- Liau and Chang instructed managers at a Southeast Asian company to place orders with the US manufacturer for servers.
- The systems were assembled in the US, then shipped to facilities in Taiwan, and from there to the company involved in other Southeast Asian countries.
- The firm then repackaged the servers in unmarked boxes to hide their contents before sending them to final destinations in China.
Between 2024 and 2025, the company purchased equipment from the US manufacturer totaling $2.5 billion.
Authorities reported that the defendants and their accomplices took extensive measures to conceal the scheme. They created thousands of counterfeit servers to deceive American compliance auditors.
One surveillance camera captured Sun personally overseeing the process of replacing serial number labels, with employees using a heat gun for the task.
Liau, Chang, and Sun face three conspiracy charges for:
- violating the Export Control Reform Act (maximum penalty of 20 years in prison);
- smuggling goods from the US (up to five years);
- defrauding the United States (up to five years).
Rumors of Smuggling
Reports of smuggling banned export chips have surfaced over the past few years.
In December 2024, media reported that the US Department of Commerce had contacted Nvidia to investigate how its products ended up in China.
In response, the tech giant asked major distributors—Super Micro and Dell Technologies—to vet their clients in Southeast Asia.
At that time, five different participants in the smuggling scheme claimed they had "managed to avoid detection during Super Micro's audits."
In July 2025, it was revealed that chips worth about $1 billion had been smuggled into China just three months after the Trump administration tightened export controls.
According to the Financial Times, the B200 became the most popular and accessible processor on the black market.
In December, further rumors of smuggling emerged. Nvidia developed technology to track the location of its processors.
This feature was privately introduced and offered to clients as an option. The tool utilizes "confidential computing capabilities of GPUs."
The software is designed to "track the overall performance of the chip." This is reportedly standard practice among companies purchasing processors in bulk for large data centers.
The location of the semiconductors is determined by analyzing the latency in data exchanges with Nvidia servers. The corporation plans to make the software open-source for external researchers to study.
Notably, in December 2025, Trump authorized the sale of H200 AI chips to "approved customers" in China and other countries, provided the US receives 25% of the profits.