Dive Brief:
- Super Micro Computer’s co-founder Yih-Shyan “Wally” Liaw, along with Ruei-Tsang "Steven" Chang, a sales manager in Taiwan, and a contractor, Ting-Wei "Willy" Sun, were each charged in connection with a scheme to “secretly divert billions of dollars worth of servers with cutting edge U.S. Artificial Intelligence Technology to China,” according to a Thursday release from the U.S. Attorney’s Office in the Southern District of New York.
- An indictment unsealed Thursday charged Liaw, 71, Chang, 53, of Taiwan and Sun, 44, also of Taiwan, each with one count of conspiring to violate the Export Controls Reform Act, one count of conspiring to smuggle goods from the U.S. and one count of conspiring to defraud the U.S. Both Liaw and Sun were arrested Thursday and presented in the Northern District of California, while Chang remains a fugitive, according to the release.
- AI server maker Super Micro, which said it was not named as a defendant in the indictment, has placed on administrative leave Liaw, who is also senior vice president of business development and a board member, and Chang, and “terminated its relationship” with Sun, effective immediately.
Dive Insight:
San Jose, California-based Super Micro’s shares slumped 33% Friday to close at $20.53.
The company said that the actions alleged in the indictment were not aligned with the company’s policies. “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 its Thursday release. “Supermicro maintains a robust compliance program and is committed to full adherence to all applicable U.S. export and re-export control laws and regulations.”
According to the indictment as described in the release, which did not specifically identify Super Micro, Liaw and Chang worked with third party brokers and customers based in China to place orders for servers. The servers were typically assembled in the U.S. and shipped to the U.S. manufacturer’s facilities in Taiwan and then delivered to another company in Southeast Asia.
That company in turn, working with the defendants, “used a shipping and logistics company to repackage the U.S. Manufacturer’s servers and place them in unmarked boxes to conceal their content prior to shipping them to their final destinations in China,” according to the indictment. The scheme involved the U.S. manufacturer purchasing servers valued at about $2.5 billion between 2024 and 2025.
The three men allegedly took steps to conceal the scheme and “deceive the U.S manufacturer’s compliance team” by staging “thousands of ‘dummy’ servers which were non-working replicas of the real servers, for inspection. For example, to pass an inspection by the U.S. Department of Commerce, a hair dryer was used to remove and affix labels and serial number stickers to the server boxes and servers.
Super Micro’s accounting and controls have drawn scrutiny in recent years.
The now-defunct short seller Hindenburg Research issued a highly critical report on Super Micro in August 2024, which detailed “glaring accounting red flags.” Following the report, Super Micro delayed the filing of its annual 10-K for the year and announced it would be completing an assessment of its internal controls.
In December 2024, the company said it would “transition” to a new CFO, with current finance chief David Weigand staying until his successor arrived. A finance team shakeup was among the recommendations made that month by an independent special committee tasked with investigating the integrity of Super Micro’s audit committee and company management, as well as their “commitment” to accurate financial statements, among other matters.
As part of the directive, the special committee said the company should appoint “at the soonest practicable time a new CFO with extensive experience working as a senior finance professional at a large public company,” according to a release at the time. Weigand, who became CFO in 2021, is still Super Micro’s finance chief.
The company did not immediately respond to a request for comments.
