GoKawiilOne of the co-founders of American server giant Super Micro has been arrested and charged with smuggling AI chips to China in violation of U.S. export laws. The deals, said to be worth upwards of $2.5 billion, saw Super Micro co-founder Yih-Shyan 'Wally' Liaw, work with several other managers and contractors who have also been charged. While a second man has been arrested, a third remains a fugitive at the time of writing.
The trio reportedly sent hardware to an unnamed Southeast Asian company before they were shipped on to their true destination, in China. Despite its size, this represents just one of many smuggling initiatives that have been discovered over the past few years. What's behind the increase in smugglers -- and what are authorities doing about it?
It's in the computer
Where other smuggling operations have hidden the restricted components inside mundane items, or disguised them as something else entirely, the Super Micro scheme was a little more brazen, even if it was still buried within layers of subterfuge.
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Prosecutors claim the co-conspirators simply shipped Super Micro servers containing the banned AI chips — likely Nvidia GPUs — to China. These servers slipped through the net because workers took the labels from them and put them on "dummy" servers, which were non-functioning replicas of the real servers.
Over time, the shipments grew larger, in one instance resulting in over half-a-billion dollars worth of servers being shipped to China between April and May 2025.
Although Super Micro has now ousted Liaw from the board and appointed new executives in compliance, this isn't the first time the company has been embroiled in a smuggling scheme with unfavorable nation states. Fortune reports that in 2006, Super Micro pleaded guilty in federal court for illegally exporting computing hardware to Iran, resulting in extensive fines.
Super Micro was found to have exported servers and various computing components from the United States to the United Arab Emirates, before shipping them on to Iran, circumventing export controls at the time.
It wasn't me
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