Supermicro stock fell 33 per cent on Friday after prosecutors charged three people with smuggling $2.5bn of Nvidia AI server gear to China.
The Southern District of New York US attorney’s office said Supermicro co-founder and board director Wally Liaw conspired with a Taiwan-based employee and a contractor to dodge US export controls.
Southern District of New York US Attorney Jay Clayton announced the FBI-backed case, the biggest US law enforcement action yet tied to AI chip exports and the alleged diversion of Nvidia kit.
Liaw, a former Supermicro senior vice-president of business development, and contractor Willy Sun were arrested, while Supermicro sales manager Steven Chang “remains a fugitive”, the US Department of Justice said.
Liaw quit Supermicro’s board, the company confirmed on Friday, as the indictment landed without naming Supermicro itself as a defendant.
The $18.5bn outfit builds Nvidia’s AI chips into servers sold to customers, including US tech groups, which is handy until someone starts rerouting the boxes.
The case lands as Nvidia gears up to ship its older but still beefy H200 chips to China after a breakthrough deal with the Trump administration in December.
Successive US administrations have tightened the screws on Nvidia’s China sales, something Nvidia’s chief executive, Jensen Huang, has lobbied against with predictable enthusiasm.
Supermicro said: “Supermicro maintains a robust compliance programme and is committed to full adherence to all applicable US export and re-export control laws and regulations,” adding it had put staff on leave and binned the contractor relationship.
Nvidia said “strict compliance” was a “top priority” and that the “unlawful diversion of controlled US computers to China is a losing proposition across the board”.
“Nvidia does not provide any service or support for such systems, and the enforcement mechanisms are rigorous and effective,” the company added.
Prosecutors said the defendants used a south-east Asia firm as a “pass-through entity”, shifting Nvidia chips from Taiwan to China via third-party brokers.
They allegedly repackaged Supermicro servers and stuck them in unmarked boxes, turning that pass-through into one of Supermicro’s biggest customers.
The indictment said it booked $99.7mn in revenue in the final quarter of Supermicro’s 2024 financial year, a neat little earner for something that should not exist.
It added that more than $510mn of Nvidia servers assembled in the US were diverted to China between late April 2025 and mid-May 2025.
Supermicro has been climbing out of its 2024 auditing scandal, with delayed results, a swapped-out chief financial officer and an independent probe that found no evidence of fraud.
The indictment sits alongside other Nvidia smuggling cases, including arrests in Los Angeles in August last year and seizures in Texas in December that netted $50mn in Nvidia tech and cash.
Council on Foreign Relations technology and security expert Chris McGuire said it was “extremely concerning” that a senior executive from a big US company involved in AI was “actively enabling, and profiting from, China’s violation of US export controls”.
“This shows that chip companies simply can’t be trusted to police themselves. Contrary to the claims of some in the industry, AI chip smuggling is a major problem, and it needs to stop,” he said.
