'Tangled web of lies': American-made AI servers secretly shipped to China, feds say
The scheme involved thousands of dummy servers, according to the indictment.
One of the founders of a company that makes high-performance computer servers used for artificial intelligence conspired to divert billions of dollars' worth of that equipment to China, in violation of U.S. export controls, federal prosecutors in New York said Thursday.
The company co-founder Yih-Shyan "Wally" Liaw, also served as the senior vice president of business development at Supermicro. Liaw is alleged to have worked with two others to carry out the scheme: Ruei-Tsang "Steven" Chang, a general manager in the company's Taiwan office, and Ting-Wei "Willy" Sun, described in the indictment as a third-party broker and "fixer."
The three defendants allegedly used a company based in Southeast Asia as a pass-through to give their transactions the appearance of legitimate commercial activity and to obscure that their real customers were based in China, the indictment said.
"Yih-Shyan Liaw, Ruei-Tsang Chang, and Ting-Wei Sun allegedly defrauded the United States by conspiring to divert significant quantities of servers with advanced artificial intelligence capabilities to Chinese customers," said FBI Assistant Director in Charge James Barnacle in a statement.
Liaw, a U.S. citizen, and Sun, a citizen of Taiwan, were arrested Thursday. Chang, who is also a citizen of Taiwan, remains at large, federal authorities said.
"As alleged in the Indictment, the defendants participated in a systematic scheme to divert massive quantities of U.S. artificial intelligence technology to customers in China," said U.S. Attorney Jay Clayton. "They did so through a tangled web of lies, obfuscation, and concealment--all to drive sales and generate revenues in violation of U.S. law. Diversion schemes like those disrupted today generate billions of dollars in ill-gotten gains and pose a direct threat to U.S. national security."
Liaw's company, Supermicro, shipped nearly $2.5 billion in servers with U.S. artificial intelligence technology sent to China, prosecutors said. Between late April 2025 and mid-May 2025 alone, at least $510 million worth of Supermicro's servers assembled in the United States, were diverted to China, according to the indictment.
To conceal the alleged scheme, the defendants staged thousands of "dummy" servers -- non-working, physical replicas of the company's servers -- for inspection at the sites where they were purportedly being stored, according to the indictment.
Supermicro, which is not named as a defendant in the case, said in a statement it is cooperating fully with the government's investigation.
The company said Liaw and Chang have been placed on administrative leave and that it had terminated its relationship with Sun, whom it identified as a contractor.
"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," the company said in a statement. "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.
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