Super Micro Computer Inc (NASDAQ:SMCI) co-founder Yih-Shyan Liaw has been arrested and charged in connection with an alleged $2.5 billion scheme to smuggle high-performance servers containing Nvidia GPUs to China, US prosecutors said.
Liaw was arrested on charges related to what authorities described as a scheme that funneled approximately $2.5 billion in servers through a Southeast Asian shell company to Chinese buyers, according to the indictment.
Prosecutors allege that the group shipped hundreds of millions of dollars’ worth of equipment in short periods, including about $510 million in servers over a three-week span in spring 2025, while attempting to evade US export controls.
The indictment claims the defendants used fabricated documentation and physical methods to conceal the true destination of the hardware, including creating dummy servers to mislead compliance checks and altering identifying labels.
Supermicro said in a statement it was not named as a defendant in the indictment and that the conduct described involved individuals acting outside company policies and controls. The company added that it maintains a compliance program designed to adhere to US export regulations.
Shares of Supermicro plummeted 28% in early trading Friday following the news.
Analysts at Wedbush Securities said the developments raise concerns about corporate controls and governance, noting that while Supermicro has emphasized the actions were carried out by individuals circumventing internal policies, the optics could weigh on customer and supplier relationships.
The firm also pointed to potential competitive implications within the AI server market, suggesting that rivals such as Dell Technologies, Cisco Systems and Hewlett Packard Enterprise could benefit if Supermicro’s operations are disrupted.
Liaw and the other defendants face charges that could carry significant prison sentences if convicted. Court proceedings are ongoing.