A federal indictment unsealed on Thursday, March 19, 2026, has accused Super Micro co-founder Yih-Shyan “Wally” Liaw and two associates of a backdoor scheme to divert Nvidia chips to China, violating U.S. export control laws. The U.S. Attorney’s Office for the Southern District of New York alleges that this sophisticated operation involved the illegal sale of at least $2.5 billion worth of computer servers containing restricted high-performance Nvidia artificial intelligence (AI) chips, posing a direct threat to national security and foreign policy interests.
The Alleged Backdoor Scheme to Divert Nvidia Chips
The core of the allegations centers on Yih-Shyan “Wally” Liaw, 71, Super Micro Computer’s co-founder, Senior Vice President of Business Development, and a board member. He was arrested in California. Liaw, a U.S. citizen controlling $464 million in Super Micro shares, is implicated alongside Ruei-Tsan “Steven” Chang, 53, a Super Micro sales manager in Taiwan (currently a fugitive), and Ting-Wei “Willy” Sun, 44, a contractor described as a “fixer” (arrested in California). These individuals are charged with violating the Export Control Reform Act through a conspiracy to systematically divert computer servers equipped with advanced Nvidia GPUs to China without the necessary U.S. Department of Commerce licenses. The scheme allegedly involved the use of a “pass-through” company in Southeast Asia to obscure the true destination, the falsification of documents, and the creation of non-working “dummy” replica servers to deceive auditors. The alleged conspiracy took place between 2024 and 2025, with servers assembled in the U.S. and then routed to China.
National Security Implications and Market Reaction
“Such schemes pose a direct threat to U.S. national security,” stated U.S. Attorney Jay Clayton, underscoring the gravity of the alleged actions.
The U.S. government has stringent export controls on advanced AI chips to China, driven by concerns over their potential military applications and their impact on the global balance of power and technological competition. The diversion of Nvidia chips could significantly undermine these efforts. Following the unsealing of the indictment, shares of Super Micro Computer, Inc. (NASDAQ: SMCI) experienced a sharp decline, falling 12% in extended trading, reflecting investor anxiety despite the company not being named as a defendant.
Super Micro’s Response and Past Scrutiny
Super Micro Computer, a global leader in IT solutions, swiftly responded to the indictment, emphasizing that the alleged actions by Liaw, Chang, and Sun contravene its established policies and compliance controls. The company asserted its robust compliance program and confirmed it is cooperating fully with the government’s investigation. As a direct consequence, Liaw and Chang have been placed on administrative leave, and Super Micro has terminated its relationship with Sun. This incident is not the first time Super Micro has faced significant scrutiny; the company was temporarily delisted from Nasdaq in 2018 for failing to file financial statements and later settled with the SEC in 2020 for $17.5 million due to “widespread accounting violations.” Notably, Wally Liaw had previously resigned from Super Micro in January 2018 during a period of accounting issues and organizational restructuring, only to be rehired as a consultant in May 2021 and subsequently reappointed to the board in December 2023. This history adds a layer of complexity to the current allegations surrounding the backdoor scheme to divert Nvidia chips.
The unsealed indictment highlights the ongoing challenges of enforcing export controls in the rapidly evolving landscape of advanced technology. The alleged conspiracy to divert Nvidia chips to China underscores the critical importance of supply chain integrity and the vigilance required to protect sensitive technologies from falling into unauthorized hands, with significant implications for global trade, national security, and the future of AI development. For further insights into the broader economic landscape, explore our related Finance news.
