Three men, including a senior vice president of Super Micro Computer Inc., have been charged with conspiring to smuggle advanced computer servers containing Nvidia chips to China.
The charges were brought forth on Thursday, outlining how the defendants allegedly violated U.S. export control laws by attempting to divert substantial quantities of high-performance servers, assembled within the United States, to China between 2024 and 2025, as stated in the indictment filed in Manhattan federal court.
According to FBI Assistant Director in Charge James C. Barnacle Jr., the individuals involved utilized forged documents, staged fake equipment to pass audits, and engaged a pass-through company to disguise their illegal activities and actual clientele.
U.S. Attorney Jay Clayton emphasized the gravity of such schemes, asserting that they pose a direct threat to U.S. national security.
Nvidia's processors are critical components for data centers that drive artificial intelligence, a transformative technology that could significantly impact societal structures and global power dynamics. The competition between the U.S. and China for dominance in AI is reminiscent of the historical arms race for nuclear weapons development during World War II.
To maintain a competitive edge, President Joe Biden has enacted restrictions on the sale of Nvidia's AI chips to China, a ban that was previously upheld during Donald Trump's administration. Last year, the Trump administration eased certain restrictions on lower-tier AI chips from Nvidia, allowing sales in exchange for a 15% commission to the U.S. government. Nevertheless, Nvidia did not include any anticipated sales to China in its recent financial forecasts.
Yih-Shyan “Wally” Liaw, 71, a U.S. citizen and senior vice president and board member of Super Micro Computer, was apprehended in California alongside Ting-Wei “Willy” Sun, 44, a contractor for the company. Ruei-Tsang “Steven” Chang, a sales manager based in Taiwan, remains at large, according to authorities. Liaw, who resides in Fremont, California, was released on bail, while Sun, a Taiwanese citizen, is awaiting a bail hearing.
The indictment reveals that Liaw and Chang directed a Southeast Asian company to place orders totaling $2.5 billion for servers from Super Micro Computer between 2024 and 2025.
Authorities report that the scheme escalated over time, with at least $510 million worth of servers being diverted to China after their assembly in the United States.
While the specific company involved was not named in the court documents, Super Micro Computer Inc. confirmed its affiliation with the arrested individuals in a statement issued late Thursday.
“The actions of these individuals as detailed in the indictment violate the Company’s policies and compliance measures, including efforts to circumvent applicable export control laws and regulations,” the company stated. “Supermicro is dedicated to maintaining a comprehensive compliance program and ensuring adherence to all U.S. export and re-export control laws.”
Super Micro Computer also noted that it is not facing indictment and is cooperating fully with the ongoing investigation.
Nvidia, in its statement, reaffirmed that strict compliance with regulations is a top priority. “We continue to collaborate with our customers and the government to enhance compliance programs as export regulations evolve. The unlawful diversion of controlled U.S. technology to China is detrimental for all parties involved — NVIDIA does not support such systems, and the enforcement mechanisms in place are both rigorous and effective,” the company remarked.
Despite the ban on sales to China, Nvidia's market value has surged over the past three years, skyrocketing from approximately $400 billion at the end of 2022 to an impressive $4.3 trillion today, making it the most valuable company globally.
In a recent statement, Nvidia CEO Jensen Huang indicated that the AI boom is poised to continue, predicting a backlog of $1 trillion in chip orders, doubling his previous estimate from a year prior.
Source: SecurityWeek News