The U.S. Department of Justice unsealed an indictment on March 19, revealing the arrest of Super Micro Computer (SMCI) executives. Co-founder Liao I-Hsien (also a board member and senior vice president of business development) was taken into custody, along with Taiwan General Manager Chang Jui-Tsang and third-party broker Sun Ting-Wei (both also arrested). The three are accused of smuggling restricted AI servers to China through Southeast Asian intermediaries, sending SMCI shares down over 12% in after-hours trading.
Shell Companies and Fake Documentation
According to the indictment, the defendants conspired with executives of a Southeast Asian entity dubbed "Company 1" to design a multi-layered scheme. Servers were assembled in the U.S., shipped to Super Micro's Taiwan facility, then moved to Southeast Asia. There, they were repackaged into unmarked boxes containing Nvidia's high-end AI chips, eventually exported to China. Company 1 acted as the "end user," placing orders for restricted AI GPU servers to evade U.S. export controls.
Bogus Inventory Audits and Records
The trio allegedly created false documents and records, and reportedly fabricated inventory audit materials to render oversight mechanisms useless. "These defendants are accused of falsifying documents, staging dummy devices to pass inventory audits, and using shell companies to conceal their illegal activities," said FBI Assistant Director Barnacle in a statement.
Scale: $2.5 Billion in Procurement
The indictment reveals that between 2024 and 2025, Company 1 purchased servers from Super Micro totaling approximately $2.5 billion. In just three weeks from late April to mid-May 2025, about $510 million worth of servers were diverted to China. Super Micro had already been under market scrutiny over financial reporting issues. The indictment of its co-founder and Taiwan executives now deepens investor concerns over corporate governance and export compliance. SMCI stock dropped more than 12% in after-hours trading.