Three men, including a senior vice president of Super Micro Computer Inc., have been charged with conspiring to smuggle advanced computer servers containing Nvidia chips to China.
The indictment, filed in Manhattan federal court, alleges that the defendants violated U.S. export control laws by planning to divert billions of dollars in high-performance servers assembled in the U.S. to China between 2024 and 2025.
FBI Assistant Director in Charge, James C. Barnacle Jr., stated that the defendants used fabricated documents and staged false equipment to mislead audit inventories, employing a pass-through company to obscure their misconduct and the identities of their true clients.
U.S. Attorney Jay Clayton emphasized that such schemes pose a direct threat to national security.
Nvidia’s processors are critical components for data centers that support artificial intelligence, a technology that has the potential to reshape society and alter global power dynamics. The competition between the U.S. and China in AI evokes historical parallels to the arms race during World War II.
In response to this competition, President Joe Biden has implemented restrictions on the sale of Nvidia's AI chips to China, a ban that was initially established during the Trump administration. Although the Trump administration began easing restrictions on lower-tier AI chips in exchange for a commission, Nvidia did not anticipate any sales to China in its recent financial forecasts.
The three individuals charged include Yih-Shyan “Wally” Liaw, 71, a U.S. citizen and senior vice president of Super Micro Computer, who was arrested in California. Also charged is Ting-Wei “Willy” Sun, 44, a contractor for the company. Ruei-Tsang “Steven” Chang, a sales manager based in Taiwan, remains at large. Liaw was released on bail, while Sun is awaiting a bail hearing. The legal representation for both individuals is currently unknown.
The indictment claims that Liaw and Chang directed executives in Southeast Asia to place orders for $2.5 billion worth of servers from Super Micro Computer between 2024 and 2025.
Authorities assert that the scheme became increasingly bold, with at least $510 million worth of Super Micro Computer servers being funneled to China after assembly in the U.S.
Although the court documents did not specify the Southeast Asian company involved, Super Micro Computer issued a statement confirming the affiliations of the arrested individuals and asserting that their actions contradict the company’s policies and compliance measures.
“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,” Super Micro stated. The company emphasized its commitment to compliance and indicated that it has been fully cooperating with the government investigation.
Nvidia also expressed its commitment to compliance, stating that it prioritizes strict adherence to export regulations. The company added, “Unlawful diversion of controlled U.S. computers to China is a losing proposition across the board — NVIDIA does not provide any service or support for such systems, and the enforcement mechanisms are rigorous and effective.”
Despite the restrictions on sales to China, Nvidia’s market value has skyrocketed, increasing from about $400 billion at the end of 2022 to $4.3 trillion today, making it the most valuable company globally.
Earlier this week, Nvidia CEO Jensen Huang indicated that the demand for AI technology remains strong, forecasting a $1 trillion backlog in chip orders, which is double his estimate from the previous year.
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Source: SecurityWeek News