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US authorities charge trio in AI chip smuggling scheme
The US Department of Justice (DOJ) has charged three individuals linked to a US technology supplier with conspiring to illegally export advanced artificial intelligence (AI) semiconductors to China. The scheme involved falsified records, dummy equipment, and an elaborate diversion plan, prosecutors said on Thursday.
Key figures and their roles
The DOJ identified the accused as Yih-Shyan "Wally" Liaw, a US citizen and co-founder of California-based Super Micro Computer; Ting-Wei "Willy" Sun, a Taiwanese contractor; and Ruei-Tsang "Steven" Chang, a Taiwanese national still at large. Liaw served as Super Micro's Senior Vice President of Business Development, while Chang worked as a sales manager for the company.
Super Micro confirmed the individuals' association with the firm but emphasized it was not named as a defendant. The company placed Liaw and Chang on leave and terminated its contract with Sun, stating the alleged actions violated its compliance policies and export control laws.
How the scheme allegedly worked
Prosecutors allege the trio collaborated with an unnamed Southeast Asian firm, referred to as "Company-1," to divert Nvidia-made AI chips to China. Company-1 placed orders for servers containing the restricted semiconductors, then falsified documents to disguise the end user as itself. Instead, the servers were repackaged in unmarked boxes and shipped to China, bypassing US export controls.
The DOJ said the group used thousands of replica "dummy" servers to deceive auditors, while the genuine servers were already en route to China. Surveillance footage reportedly showed Sun using hair dryers to remove and reapply labels and serial numbers on the boxes.
Scale and impact of the operation
According to the DOJ, Company-1 purchased approximately $2.5 billion worth of equipment, funneling "massive quantities" of servers with controlled AI technology to China. The defendants and the US manufacturer lacked the required export licenses for such shipments.
Nvidia, whose chips were at the center of the scheme, stated it collaborates closely with customers and authorities on compliance. A spokesperson called the diversion of controlled US computers to China "a losing proposition," noting the company does not support such systems and that enforcement mechanisms are robust.
Broader context of US-China tech tensions
The case highlights ongoing US efforts to restrict China's access to advanced AI chips due to national security concerns. While the US initially sought to block exports of Nvidia's high-end processors to China, it later permitted some shipments under revised regulations announced in December 2025.
In a separate case, two Chinese nationals were arrested in August 2025 for allegedly smuggling millions of dollars' worth of Nvidia chips to China via Malaysia and Singapore. Their company, ALX Solutions, reportedly misled Super Micro by claiming the chips were destined for a Singapore-based customer.
Next steps and industry response
Super Micro reiterated its commitment to cooperating with the investigation, stressing that the alleged actions contradicted its policies. The DOJ has not commented on potential further charges or the status of the fugitive, Chang.
