Yih-Shyan “Wally” Liaw, co-founder of Supermicro and a senior executive deeply involved in the AI hardware sector, was arrested on Thursday in connection with an alleged scheme to smuggle $2.5 billion worth of Supermicro AI servers to China, reports Baltimore Chronicle via the Department of Justice. Liaw, 71, who has long been a close confidante of Supermicro Chairman and CEO Charles Liang, was charged alongside two others in a Manhattan federal court indictment that unsealed the details of the alleged operation.
The indictment names Liaw, Supermicro’s Taiwan General Manager Ruei-Tsang “Steven” Chang, who remains at large, and a third-party contractor, Ting-Wei “Willy” Sun, who was also taken into custody. According to the DOJ, between 2024 and 2025, Liaw coordinated with Chang to secretly find Chinese buyers for Supermicro AI servers equipped with high-demand Nvidia GPUs. The servers were allegedly ordered through a Southeast Asian intermediary company, assembled in the U.S., shipped to Taiwan, and then covertly rerouted to China in unmarked boxes after removing identifying packaging.
To conceal the operation from Supermicro’s compliance team, the defendants reportedly staged thousands of dummy servers at the intermediary warehouse. Surveillance footage allegedly showed Sun and a co-conspirator repackaging these fakes and transferring serial-number labels to create the appearance of legitimate inventory. DOJ officials said encrypted messaging apps were used to coordinate quantities, destinations, and concealment strategies.
Supermicro issued a statement confirming it is not named in the indictment, placing Liaw and Chang on administrative leave, and noting Sun was fired from his contracting role. The company emphasized its robust compliance program and ongoing cooperation with federal authorities. Nvidia, whose GPUs were at the center of the scheme, confirmed strict adherence to export regulations and stated it provides no support for diverted servers.
The DOJ indictment claims that during a three-week period in 2025, approximately $500 million worth of servers were shipped to China under the clandestine operation. Liaw, Chang, and Sun each face up to 20 years in prison for conspiracy to violate the Export Controls Reform Act, along with additional charges of smuggling and fraud. U.S. Attorney Jay Clayton described the operation as a complex web of false documentation and obfuscation designed to circumvent U.S. law and generate significant illicit revenue while threatening national security.
Liaw, a 2.6% Supermicro shareholder, has had longstanding ties with the Liang-Liu family, who together control a significant portion of the company. Two affiliated Taiwan-based companies, Ablecom Technology and Compuware Technology, received nearly $1 billion in payments from Supermicro over the past three years, with family members holding key leadership roles and substantial ownership stakes. The DOJ alleges these networks and business relationships facilitated the alleged diversion of AI servers to China.
This arrest follows a history of compliance and governance issues at Supermicro, including accounting investigations, auditor resignations, and prior SEC scrutiny. Liaw had returned to an executive role in 2022 after earlier resignations and internal audits, highlighting ongoing concerns about oversight and corporate controls in the company’s operations.
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