NEW YORK (AP) — A senior vice president of Super Micro Computer Inc., along with two associates, has been charged with conspiring to illegally export billions of dollars worth of computer servers containing advanced Nvidia chips to China.
The indictment, filed in federal court in Manhattan, alleges that these individuals circumvented U.S. export control laws by planning to divert massive quantities of state-of-the-art servers, manufactured in the U.S., to China between 2024 and 2025.
According to FBI Assistant Director in Charge James C. Barnacle Jr., the accused used forged documents and staged fake equipment to mislead audits, employing a pass-through company to hide their activities and actual clients.
U.S. Attorney Jay Clayton remarked that such schemes represent a significant threat to national security.
Nvidia’s processors have become essential for data centers powering artificial intelligence, a transformative technology that could alter global dynamics. As a result, both the U.S. and China are in fierce competition for dominance in AI, reminiscent of the arms race for nuclear weapons during World War II.
In response to this competition, President Joe Biden has imposed restrictions on Nvidia’s AI chip sales to China, a ban initially established under President Donald Trump, which was relaxed last year for lower-tier AI chips with a 15% commission to the U.S. government. Despite this concession, Nvidia has not included any projected revenue from sales to China in its latest financial report.
Yih-Shyan “Wally” Liaw, 71, a U.S. citizen, and senior vice president of Super Micro Computer, was arrested in California, joined by Ting-Wei “Willy” Sun, 44, a contractor for the company. Ruei-Tsang “Steven” Chang, a sales manager based in Taiwan, remains at large. Liaw is out on bail, while Sun awaits a bail hearing. It’s unclear who is representing them legally.
The indictment alleges that Liaw and Chang directed executives of a Southeast Asian firm to place orders totaling $2.5 billion for servers from Super Micro between 2024 and 2025.
Authorities claim the operation escalated, resulting in at least $510 million worth of Super Micro’s servers being illegally rerouted to China after assembly in the U.S.
While the specific company involved was not disclosed, Super Micro Computer Inc. acknowledged the arrests and stated that the actions of those charged contradicted the company’s policies and compliance standards, which aim to uphold U.S. export control laws. The company highlighted its robust compliance program and commitment to government cooperation in the ongoing investigation.
Nvidia emphasized its dedication to strict compliance and collaboration with customers and the government regarding export regulations. “Unlawful diversion of controlled U.S. computers to China is detrimental for all parties involved,” they stated, emphasizing that they do not endorse any service or support for such diverted systems.
Despite the lack of sales to China, Nvidia’s market value has surged from around $400 billion at the end of 2022 to $4.3 trillion today, making it the world’s most valuable company.
This week, Nvidia CEO Jensen Huang indicated that the AI boom is set to continue, predicting a $1 trillion backlog in chip orders, double from last year’s estimates.
For the Associated Press, Michael Liedtke reported from San Francisco.
