New York — The vice president of Super Micro Computer Inc. has been charged. and two others affiliated with the company on Thursday for conspiring to smuggle billions of dollars worth of computer servers containing advanced Nvidia chips into China.
The men violated U.S. export control laws by planning to shift massive amounts of high-performance servers assembled in the U.S. to China between 2024 and 2025, according to the indictment in Manhattan federal court.
In a statement, FBI Assistant Director in Charge James C. Barnacle Jr. said the defendants used fabricated documents, set up fake equipment to pass audit inventories and used a pass-through company to hide their misconduct and real client list.
US Attorney Jay Clayton said such schemes “pose a direct threat to US national security.”
Nvidia processors have emerged as indispensable building blocks for the data centers that power artificial intelligence — a potentially game-changing technology that could reshape society and change the balance of power in the world. For this reason, the United States and China are vying to gain the upper hand in the field of artificial intelligence, evoking memories of the arms race between the United States and Germany to develop the first nuclear bomb during World War II.
To help gain the upper hand, President Joe Biden imposed restrictions on the sale of Nvidia’s AI chips to China, a ban that President Donald Trump maintained on the company’s most powerful processors. The Trump administration last year began easing a ban on Nvidia’s sales in China of lower-tier AI chips in return For 15% commission Paid to the US government. But even with that concession, Nvidia still hasn’t factored any China sales into its included revenue forecast In its latest financial report Released late last month.
Yeh-Xian “Wally” Liao, 71, a US citizen and senior vice president and board member of Super Micro Computer, was arrested in California on Thursday along with Ting Wei “Willie” Sun, 44, a contractor for the company. Authorities said Roy Tsang “Steven” Chang, the company’s sales manager in Taiwan, remains at large. Liao, of Fremont, California, was released on bail while Sun, a Taiwanese national, was detained for a bail hearing on Friday. It was not immediately clear who represents them.
The indictment said Liao and Zhang directed executives of a Southeast Asian company to place orders to purchase $2.5 billion worth of servers from San Jose, California-based Super Micro Computer between 2024 and 2025.
Authorities say the scheme became more audacious over time, with at least $510 million worth of Super Micro Computer servers diverted to China after being assembled in the United States.
The court papers did not identify the company, but Super Micro Computer Inc. It issued a statement late Thursday outlining how the men who were arrested were connected to the company.
“The conduct of these individuals alleged in the indictment is a violation of the company’s policies and compliance controls, including efforts to circumvent applicable export control laws and regulations,” the company said. “Supermicro maintains a robust compliance program and is committed to fully complying with all applicable U.S. export and re-export control laws and regulations.”
The company, which noted that it had not been charged, said it was “fully cooperating with the government’s investigation and will continue to do so.”
“Strict compliance is a top priority for Nvidia,” Nvidia said in a statement.
“We continue to work closely with our customers and the government on compliance programs as export regulations expand. The illegal diversion of censored US computers to China is a losing proposition across the board – NVIDIA provides no service or support for such systems, and enforcement mechanisms are strict and effective,” the company said.
Nvidia processors have emerged as indispensable building blocks for the data centers that power artificial intelligence — a potentially game-changing technology that could reshape society and change the balance of power in the world. For this reason, the United States and China are vying to gain the upper hand in the field of artificial intelligence, evoking memories of the arms race between the United States and Germany to develop the first nuclear bomb during World War II.
Even without sales to China, Nvidia’s fortunes have soared over a three-year trajectory that has seen its market value rise from about $400 billion at the end of 2022 to $4.3 trillion today — more than any other company in the world.
Earlier this week, Nvidia CEO Jensen Huang signaled that the AI boom will continue by predicting that it will soon have a $1 trillion backlog in chip orders, double his estimate a year ago.
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Associated Press writer Michael Liedtke reported from San Francisco.