US-based server company Super Micro Computer Co-founder Yih-Shyan “Wally” Liaw has been arrested for allegedly facilitating the smuggling of high-end AI servers with Nvidia graphics chips to China. According to US officials, Liaw, along with Ruei-Tsang Chang and Ting-Wei Sun, secretly diverted billions of dollars’ worth of servers to customers in China without necessary government approvals.
US officials said the servers smuggled from the US were made by Supermicro and contained advanced AI hardware currently banned from export to China over concerns of national security. It is alleged that middle-men companies and fake documents were used to make the shipments look legal on paper.
Liaw and his associates are alleged to have used a network of shell companies and intermediaries in Taiwan, Singapore, and other parts of Southeast Asia to hide the real destination of the shipments. On paper, the servers were sold to these companies, but prosecutors allege the hardware ultimately ended up in China. Those under suspicion are said to have used false export documents, faked names of end users, and routed shipments through third countries to make the transactions appear legal.
US authorities claim the group went further to trick compliance checks. In some cases, they allegedly staged warehouse inspections using dummy servers while the real machines were already being shipped. The group is also said to have repackaged the equipment into unmarked boxes, removed labels, and replaced serial numbers to conceal what the shipments actually contained.
The illegal exports are reportedly worth around $2.5 billion, and the case is being treated as a serious threat to US national security. Prosecutors argue that advanced AI chips and servers can be used for military systems, surveillance technology, and high-level artificial intelligence research, which is why the US has tightened export controls in recent years.
The company itself has not been charged, but it said the alleged actions go against its policies and that it is cooperating with authorities.
The case comes amid the intensifying AI race between the US and China, as companies rush to gain an edge in the new technology. The US government has been steadily tightening what many call a “silicon curtain”, arguing that China’s access to top-tier hardware must be restricted to prevent advances in military and surveillance capabilities.
This strategy is mainly enforced through the Department of Commerce’s Entity List, which restricts certain foreign companies and individuals from buying sensitive US technology. By limiting the flow of high-end GPUs, the US aims to slow China’s progress in autonomous weapons, hypersonic missile development, and large-scale facial recognition systems.
Meanwhile, amid this intensifying AI race, the US has also pressured allies, most notably the Netherlands and Japan, to join a coordinated effort to block China from acquiring the advanced lithography machines needed to manufacture its own cutting-edge chips. This chokepoint strategy is said to be designed to keep global AI leadership largely in the hands of Western-aligned nations, even as China continues to invest billions in building its own semiconductor industry.
