Three individuals, including a senior vice president of Super Micro Computer Inc., have been charged with conspiring to smuggle advanced Nvidia chips and computer servers to China.
The indictment, filed in Manhattan federal court, alleges that Yih-Shyan “Wally” Liaw, 71, along with Ting-Wei “Willy” Sun, 44, and Ruei-Tsang “Steven” Chang, were involved in a scheme to divert billions of dollars worth of high-performance servers assembled in the United States to China between 2024 and 2025.
According to the charges, the defendants utilized fabricated documents, staged false audits, and employed a pass-through company to obscure their illegal activities and the identities of their actual clients.
FBI Assistant Director in Charge, James C. Barnacle Jr., emphasized that such schemes threaten U.S. national security. U.S. Attorney Jay Clayton echoed this sentiment, stating that actions like these undermine the integrity of export laws designed to safeguard national interests.
Nvidia's processors are crucial for data centers that power artificial intelligence technology, a field that is becoming increasingly competitive as the U.S. and China vie for dominance in AI development. This rivalry parallels historical arms races, reminiscent of the U.S. and Germany's pursuit of nuclear capabilities during World War II.
In light of this competition, President Joe Biden has imposed restrictions on the sale of Nvidia’s AI chips to China, a policy initially set by the Trump administration that aimed to control the flow of powerful technology to potential adversaries. The previous administration had begun to relax some restrictions on lower-tier AI chips in exchange for a commission to the U.S. government, but Nvidia has not included any sales to China in its recent financial forecasts.
Liaw, who is a U.S. citizen and a senior vice president at Super Micro Computer, was arrested in California alongside Sun, a Taiwanese citizen. Chang, a sales manager in Taiwan, remains at large. Liaw was released on bail, while Sun faced a bail hearing shortly after their arrest.
The indictment indicates that Liaw and Chang directed a Southeast Asian company to order $2.5 billion worth of servers from Super Micro Computer over the specified period. Authorities have indicated that the operation grew increasingly brazen, with at least $510 million worth of these servers allegedly diverted to China after being assembled in the U.S.
While the specific company involved in the scheme was not named in court documents, Super Micro Computer acknowledged the affiliation of the accused in a statement. The company asserted that the actions described in the indictment violate its policies and compliance protocols, including efforts to circumvent export control laws. They reaffirmed their commitment to adhering to all applicable U.S. regulations.
Super Micro Computer also stated that it has been cooperating fully with the ongoing government investigation. Nvidia, in a statement regarding the situation, emphasized that compliance with export regulations is a top priority and that they continue to work closely with customers and government officials on compliance matters. They noted that unlawful diversion of controlled U.S. technology to China is detrimental and that they do not support such activities.
Despite the restrictions on sales to China, Nvidia has experienced significant growth, with its market value soaring from approximately $400 billion at the end of 2022 to roughly $4.3 trillion today, making it one of the most valuable companies in the world. Nvidia's CEO, Jensen Huang, recently indicated that the demand for AI technology remains high, with expectations of a $1 trillion backlog in chip orders, doubling the previous year’s estimates.
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Source: SecurityWeek News