MW Super Micro cofounder engaged in backdoor scheme to divert Nvidia chips to China, U.S. government says
By Emily Bary
Shares of Super Micro fall, though the company itself was not named in the federal indictment
Super Micro servers were used to illegally transport advanced Nvidia chips to China, a new lawsuit alleges.
The U.S. government has charged a Super Micro cofounder and two other individuals with a "brazen evasion" of export laws meant to prevent advanced U.S. chips from making their way to China.
Federal prosecutors in Manhattan charged Wally Liaw for conspiring to divert to China computer servers that contained heavily-controlled Nvidia (NVDA) chips, according to an indictment that was unsealed on Thursday. The indictment claims that the charged individuals worked with a Southeast Asian company that would order "large allocations" of Super Micro $(SMCI)$ servers and then arrange for their "onward transshipment to China."
Liaw and his affiliates engaged in "a tangled web of lies, obfuscation, and concealment - all to drive sales and generate revenues in violation of U.S. law," federal prosecutors said in a press release.
While Super Micro wasn't named in the suit or as a defendant, Liaw is a company cofounder, a board member and the vice president of business development. The company has put him and another employee who federal prosecutors charged, Ruei-Tsang Chang, on administrative leave, Super Micro also terminated its relationship with a contractor, Ting-Wei Sun, who federal prosecutors also say participated in a conspiracy that sent sensitive and advanced AI chips to China.
"The conduct by these individuals alleged in the indictment is a contravention of the company's policies and compliance controls, including efforts to circumvent applicable export control laws and regulations," Super Micro said in a release.
The company "has been cooperating fully with the government's investigation and will continue to do so," it added in the release.
Super Micro didn't immediately respond to a MarketWatch request for comment. MarketWatch was unable to quickly contact Liaw, Chang or Sun.
Nvidia and the U.S. Attorney's Office didn't immediately respond to MarketWatch's request for comment.
Shares of Super Micro fell about 12% in Thursday's extended session.
Don't miss: Can China just steal America's AI brain that's costing trillions to develop?
Federal prosecutors said "extensive measures" were used by Liaw and others to keep the "scheme" a secret. These measures included staging "non-working" replicas of the company's servers so that inspectors wouldn't realize the real versions had been unlawfully sent to China, prosecutors claim.
"These defendants allegedly fabricated documents, staged bogus equipment to pass audit inventories, and used a pass-through company to conceal their misconduct and true clientele list," federal prosecutors said.
Chip-making technology has found itself at the heart of a geopolitical battle between the U.S. and China. Semiconductors made by Nvidia and Advanced Micro Devices $(AMD)$ are considered to be the gold standard, and the U.S. has curbed sales to China in part by setting performance restrictions on the chips that U.S. companies are allowed to sell in the country. The most advanced Nvidia chips, for instance, are not permitted by the U.S. government to be sold in China.
See also: Did everyone forget about DeepSeek? What Wall Street is getting wrong about Chinese AI.
"Those regulations reflect a formal determination that the computing capabilities in advanced artificial intelligence accelerator hardware are of sufficient strategic significance that their transfer to China poses an unacceptable risk to national security," the lawsuit says.
It claims that the Nvidia chips diverted to China through the alleged scheme were those specifically subject to export controls.
-Emily Bary
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 19, 2026 21:38 ET (01:38 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments