U.S. authorities have charged Super Micro Computer co-founder Yi-Shyan Liau with smuggling $2.5 billion worth of AI chips to China, revealing a major operation involving deception and counterfeit servers.
U.S. law enforcement has apprehended Yi-Shyan "Wally" Liau, a co-founder of Super Micro Computer, charging him with orchestrating a smuggling operation that funneled AI chips valued at $2.5 billion into China. The Department of Justice announced the charges, which also include other key figures like Jui-Tsan "Steven" Chang, the general manager of Super Micro's Taiwan branch, who remains at large, and broker Ting-Wei "Willy" Sun, who is currently in custody.
Investigators found that the defendants used deceptive practices to mislead inspectors, including document forgery and a sophisticated transit scheme that involved a middleman company to hide the actual destination of the chips. Jay Clayton, U.S. Attorney for the Southern District of New York, emphasized the seriousness of the situation, stating, “Such schemes generate billions in illegal profits and pose a direct threat to US national security.”
The smuggling operation involved a systematic plan where Liau and Chang directed managers at a Southeast Asian firm to place orders for servers from a U.S. manufacturer. These servers were assembled in the U.S., shipped to Taiwan, and then repackaged in unmarked boxes before being sent to China.
- Orders were placed with a U.S. manufacturer for server assembly.
- Servers were shipped to Taiwan, where they were repackaged.
- Final shipments were sent to China, disguised to avoid scrutiny.
From 2024 to 2025, the total value of the equipment purchased reached $2.5 billion. Authorities revealed that the defendants employed extensive measures to obscure their activities, including creating counterfeit servers to mislead compliance audits. Surveillance footage captured Sun overseeing the manipulation of serial number labels.
Liau, Chang, and Sun now face multiple charges, including violating the Export Control Reform Act, which carries a maximum sentence of 20 years, as well as charges for smuggling and defrauding the U.S., each potentially resulting in five years in prison.
Background on Smuggling Allegations
Reports of smuggling high-value export chips have emerged over the past few years. In late 2024, the U.S. Department of Commerce initiated an investigation into how Nvidia products were reaching China, prompting Nvidia to instruct distributors like Super Micro to scrutinize their Southeast Asian clients. Participants in the smuggling operation claimed they had successfully evaded detection during audits.
By mid-2025, it was disclosed that approximately $1 billion worth of chips had been smuggled into China shortly after stricter export controls were implemented by the Trump administration. The Financial Times indicated that the B200 chip became a sought-after item on the black market.
In response to ongoing smuggling concerns, Nvidia developed a tracking technology for its processors, allowing for monitoring of chip performance and location. This tool leverages the confidential computing capabilities of GPUs and is set to be made open-source for further research. Notably, in December 2025, Trump approved the sale of H200 AI chips to select customers in China, contingent on the U.S. receiving a share of the profits.
