The U.S. Attorney’s Office for the Southern District of New York has charged unidentified officials of a U.S. server maker with illegally misappropriating billions of dollars in funds. Nvidia-Power supply server to China.
As American artificial intelligence companies such as Anthropic and OpenAI face challenges from DeepSeek and other Chinese rivals, the U.S. government is trying to figure out how high-performance chips ended up in China without permission.
In an indictment unsealed Thursday, the U.S. government alleged that Yi-Shang “Wally” Liau, Rui Tsang “Stephen” Zhang, and Tingwei “Willy” Sun collaborated to violate the Export Control Reform Act.
The server company’s products, which include Nvidia chips, “are subject to strict U.S. export controls that prohibit their sale to China without a license,” the plaintiffs said in the complaint. “These regulations are in place to, among other things, protect the national security and foreign policy interests of the United States.”
Liaw is a co-founder of Server Maker super microcomputer and members of its Board of Directors. He controls $464 million worth of supermicro stocks, according to FactSet. He did not respond to requests for comment.
Supermicro’s stock price fell 12% in after-hours trading after the federal court announced the indictment.
Supermicro said the company is not named as a defendant, but Liau works as senior vice president of business development, Chan is a sales manager in Taiwan and Sun is a contractor. The company placed employees on leave and terminated relationships with contractors.
“The conduct by these individuals alleged in the indictment violates our policies and compliance controls, including efforts to circumvent applicable export control laws and regulations,” the statement said. “Supermicro maintains a robust compliance program and is committed to full compliance with all applicable U.S. export and reexport control laws and regulations.”
The indictment alleges that the Southeast Asian company created false documents to appear to be using the servers as intermediaries and concealed them by having another logistics company repackage the servers before going to China.
According to the indictment, the defendants attempted to mislead a server manufacturer’s compliance team with “dummy” servers located at a company’s storage facility in Southeast Asia and pressured the compliance team to approve the shipment, even though the actual servers had already been transferred to China. The defendants also allegedly used “dummy” servers during visits by U.S. export control officials.
The effort has generated approximately $2.5 billion in sales for the server maker since 2024, with $510 million sold between late April 2025 and mid-May 2025 going to the company in Southeast Asia and China, the indictment states. The plaintiffs said the server maker did not have permission from the U.S. Department of Commerce to export servers equipped with Nvidia GPUs to China.
According to the indictment, Chan worked to prevent auditors from inspecting some of the data centers where the Southeast Asian company allegedly stored servers, when in fact he was in China and arranged for a purported “friendly” auditor to conduct the audit. In 2024, Supermicro announced that its auditor, Ernst & Young, would resign and that it would be replaced by BDO.
Nvidia’s graphics processing units are in demand around the world for training generative AI models.
U.S. President Donald Trump initially tried to block Chinese access to processors. However, he said in December that he told Chinese President Xi Jinping that the United States would allow NVIDIA to ship H200 GPUs to China “under conditions that continue to enable strong national security.” Earlier this week, NVIDIA CEO Jensen Huang said the chipmaker was restarting production to fulfill H200 orders from China.
Last summer, Nvidia received a license to export its H20 chips to China, and Huang agreed to give 15% of sales in China to the United States.
Prosecutors allege that Mr. Liau encouraged Southeast Asian companies to adopt Nvidia’s more advanced chip, the B200, based on the Blackwell architecture, by the end of 2024.
“Approximately how many can we get by January, February, March and April?” Liau texted an executive at a Southeast Asian company. “It’s enough to make a rough forecast… Then you can make a proposal to (Nvidia) in a way that they can accept… This is the only way to get (Nvidia) to commit to the B200 allocation. As far as I know.”
According to the indictment, Liau sent the executive a link in 2025 to a White House statement on export rules for AI products that were expected to be enacted later that year, saying the company needed to increase the pace of shipments by the effective date.
When a broker who bought Nvidia-powered servers from a Southeast Asian company sent Liaw a text message with a link to an announcement that a Chinese man had been arrested for smuggling AI chips into China, Liaw allegedly replied with a sobbing emoji.
Jay Clayton, the US attorney for the Southern District of New York and former chairman of the Securities and Exchange Commission, who was appointed by President Trump, said in a statement that “crimes involving sensitive technology require swift action.” “Otherwise, the law is meaningless.” Mr. Liau and Mr. Sun were both arrested on Thursday, and Mr. Chan remains at large, the law firm said.
