Supermicro has spent the past three years riding the AI wave in Silicon Valley but before the recent allegations involving a co-founder smuggling Nvidia chips, it previously ran afoul of export-control regulations.
The hardware manufacturer’s co-founder, Yih-Shyan “Wally” Liaw, was charged on Thursday with conspiring to smuggle about $2.5 billion worth of highly coveted Nvidia GPUs in servers to China. Prosecutors claim that Liaw, along with Supermicro’s Taiwan general manager Ruei-Tsang “Steven” Chang, and a “fixer” named Ting-Wei “Willy” Sun, routed servers with banned Nvidia H200 and B200 GPUs through an unnamed Southeast Asian company to Chinese buyers who wanted the chips. Authorities arrested Liaw and Sun this past week. Chang remains a fugitive, according to the Department of Justice. The company has not been accused of wrongdoing, and neither have co-founders Charles Liang, who is the CEO and chairman, nor his wife, Sara Liu, a board member and co-founder.
In a statement Supermicro said Liaw resigned his board seat on Friday, and he remains on administrative leave, along with Chang. Sun was fired. Supermicro’s stock plummeted in trading on Friday, giving short sellers who have collectively bet $2.6 billion against the company a windfall. Shorts collected an estimated $860 million in single-day gains after the stock sank 33%, according to financial data firm S3 Partners. The day pushed their March gains to nearly $1 billion. Supermicro has said it is cooperating with law enforcement and it was not named in the indictment.
However, this isn’t Supermicro’s first brush with this type of export-control violation.
Court records and the company’s own disclosures show the latest allegations of smuggling to a restricted market show striking similarities to a 20-year-old enforcement action also involving the company, which was founded in 1993 by Liaw, Liang, and Liu. None of the three were named in the 2006 enforcement or charged with wrongdoing.
In 2006, Supermicro pleaded guilty in federal court to illegally exporting computer equipment to Iran, and paid a $150,000 fine to the Department of Justice. Separately, Supermicro settled a parallel action involving 12 charges related to sales of servers, motherboards, and computer chassis brought by the Commerce Department’s Bureau of Industry and Security (BIS) by paying a $125,400 civil penalty. The company also paid an additional $179,327 to the Treasury Department’s Office of Foreign Assets Control (OFAC) to settle allegations under the Iranian Transactions Regulation, a violation that OFAC said Supermicro did not voluntarily disclose to the regulator.
The two cases—separated by two decades and vast differences in scope—allegedly share a similar pattern. Find a neighboring country where it is legal to sell to, hide the real buyer, and ship the restricted tech to the illegal market.
A representative for Supermicro declined to comment on the Iran violations.
The scheme
The Iran tech sales took place between September 2001 and March 2003, court records show, about a decade after Liaw, Liang, and Liu, who serves as a senior vice president and member of the board, founded Supermicro.
According to the BIS charging document from 2006, Supermicro exported servers, motherboards, and computer chassis from the U.S. through the United Arab Emirates and then onto Iran on six separate occasions without the required licenses from OFAC. A distributor in Dubai served as the pass-through for the equipment. Officials said Supermicro’s “senior director of strategic sales knew of, or had reason to know” about the embargo on sales to Iran. BIS charged the company with three counts of selling goods knowing that export violations would occur and three counts of misrepresenting its shipper export declarations to the U.S. government by claiming it did not need a license to sell the hardware.
Supermicro settled the cases in September 2006 and cooperated with the government’s investigation, records show. It also implemented an in-house export control program before the BIS and DOJ formally brought charges. The sentencing memo stated that the fines were “sufficient to deter other companies from committing similar crimes.”
DOJ: The China conspiracy
The indictment unsealed this week claims that the accused trio of Liaw, Sun, and Chang allegedly conspired to route servers that included the Nvidia chips in 2024. The defendants allegedly sent the servers through an unnamed Southeast Asian company before they made their way to China. Liaw, Sun, and Chang could not be reached for comment.
The mechanics alleged in the indictment mirror the Iran violation from 20 years ago. In the alleged China scheme, the Southeast Asian company submitted repeat purchase orders to Supermicro purportedly for its own use. Instead, when the servers arrived after being assembled in the U.S., the Southeast Asian company allegedly sent them on to the real buyers in China. To keep it all hidden, the servers were allegedly repacked in unmarked boxes, the indictment states.
According to the indictment, the Southeast Asian company grew to become one of Supermicro’s biggest customers, ranking 11th globally in fiscal 2024 with $99.7 million in revenue. Ultimately, the total value of server sales grew to $2.5 billion, authorities claim.
Throughout the swell, Liaw was allegedly directing the activities behind the scenes, the indictment says.
In January 2025 when the Trump Administration announced new AI export restrictions slated to start on May 13, 2025, Liaw texted an executive at the Southeast Asian company, “We need to speed these up before May 13!” A few days later, the indictment notes, he texted again, “We can ship all your 512 x B200 by Feb. Let us run fast before May 13!” he wrote, referring to the Nvidia GPUs.
According to the indictment, the executive Liaw texted with wrote him in March and sent a news article about smugglers being accused of routing Nvidia chips to China and wrote, “I’m very concerned Wally.” Liaw wrote back trying to assuage his concerns and then continued making inquiries about the GPU orders, the indictment states. In August 2025, one of the brokers allegedly involved in the Supermicro scheme sent Liaw a link to a DOJ press release about more arrests for AI chip smuggling. Liaw replied with a string of sobbing-face emojis, the indictment states, and then kept working with Chang and Sun, authorities say.
The indictment notes that as the orders continued, the accused allegedly worked harder to keep it all secret. Supermicro’s compliance team started an audit in late 2024, the indictment states, which was around the time Supermicro was dealing with a cluster of issues in the U.S. Its auditor EY had resigned in October, the DOJ had opened an investigation into the company based on accounting allegations raised by a former employee, and it was at risk of being delisted by Nasdaq. It later hired BDO and its own internal investigation into its accounting found no evidence of wrongdoing. BDO has not been accused of wrongdoing in the smuggling case. BDO declined to comment.
During the 2024 audit during that heightened period, Chang allegedly arranged for a “friendly” auditor employed by Supermicro to conduct the inspection, the indictment states. When a second, more rigorous audit was set for August 2025, Sun and Chang allegedly staged hundreds of what authorities called “dummy” servers, which it defined as non-working physical replicas in Supermicro boxes.
The dummy servers were allegedly set up at the Southeast Asian company’s warehouses so auditors could confirm their arrival. Sun said the staging operation would need about 100 people, forklift operators, arranged meals, and a “20-person shuttle bus for easy travel between the hotel and the warehouse, allowing for short breaks,” the indictment states. During the actual audit, however, the indictment states that Supermicro’s compliance worker was off site “enjoying entertainment” on the Southeast Asian company’s dime, the indictment claims.
Sun texted Liaw to say the audit had run smoothly and included 2,107 units in three warehouses. Liaw wrote back, “That’s spectacular!” the indictment states, and continued placing new orders days later. In December 2025, BIS sent one of its own inspectors to do a post-shipment verification check. The indictment claims Sun allegedly set up the dummy servers again, using a hair dryer to peel off labels and serial-number stickers, which was captured on surveillance cameras. Authorities say Sun allegedly introduced himself as “Michael” and said he worked at the Southeast Asian company’s law firm while fielding questions from the federal BIS officer.
In the Iran case, Supermicro’s then-CFO Howard Hideshima signed off on its settlements with law enforcement. He served as the CFO from 2006 through 2018, before Nasdaq suspended the company from trading and formally delisted it in March 2019. In 2020, Hideshima and Supermicro were charged by the Securities & Exchange Commission for accounting-related issues. Hideshima was fined $50,000 by the regulator and left the company.
Liaw also left the company following the 2018 accounting scandal. The company brought him back as an adviser in “business development” in May 2021, and he returned to a full-time senior executive post in August 2022. In December 2023, he rejoined the board before his resignation this week.
On Friday, Supermicro said it appointed DeAnna Luna as its acting chief compliance officer. Luna joined Supermicro in 2024 as vice president of global trade and sanctions compliance.
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