US authorities charge trio over smuggling AI chips into China

Three individuals connected to artificial intelligence server producer Super Micro Computer Inc, including the company's co-founder, have been charged with aiding in the illegal transfer of at least $2.5 billion worth of US AI technology to China, the US Justice Department announced.

Federal prosecutors did not explicitly identify Super Micro in the indictment, referring instead to a "US manufacturer," according to Reuters. 

Super Micro, headquartered in San Jose, California, said it was notified by federal authorities of the indictment on March 19 and emphasised that the company itself "was not named as a defendant in the case" and had cooperated fully with investigators.

The Justice Department revealed that Yih-Shyan Liaw, Ruei-Tsang Chang, and Ting-Wei Sun were charged in an indictment unsealed in Manhattan federal court on March 19, alleging a sophisticated operation to route US-made servers through Taiwan to other Southeast Asian countries, where they were repackaged into unmarked boxes before being sent to China. The US has maintained export restrictions on advanced AI chips to China since 2022.

Liaw, who co-founded Super Micro in 1993, joined its board in 2023. Chang served as a sales manager at Super Micro's Taiwan office, while Sun worked as a contractor.

Authorities claim the trio took extensive measures to conceal their activity from both the US-based server manufacturers and US export control officials, allegedly using techniques such as hair dryers to remove labels and serial numbers from genuine servers and transferring them onto dummy machines that remained behind after the real servers were shipped to China.

In response to the charges, Super Micro placed Liaw and Chang on leave and severed its relationship with Sun, who was a contractor. Shares of the company dropped 8% in after-hours trading following the announcement.

US officials did not disclose which AI chips were involved, though Nvidia controls a significant share of the AI chip market and its products are among the most expensive. 

Nvidia has not immediately responded to inquiries about whether it was aware of the alleged smuggling activities.

By Jeyhun Aghazada