The Supermicro co-founder faces federal charges for a billion-dollar smuggling scheme. Specifically, prosecutors say Yih-Shyan “Wally” Liaw and two others illegally shipped Nvidia AI chips to China.
To pull it off, they used dummy servers, fake documents and a hair dryer.
Supermicro Co-Founder’s Alleged Scheme
The operation began in 2024. At that time, Liaw and his co-conspirators, sales manager Ruei‑Tsang “Steven” Chang and outside contractor Ting-Wei “Willy” Sun, directed a Southeast Asian company to place orders with Supermicro. That intermediary bought roughly $2.5 billion worth of servers containing advanced Nvidia chips.
To fool auditors, the group staged dummy servers at the intermediary’s warehouse. These non‑working replicas stood in for the real machines which had already shipped to China.
However, the most unusual tool was a hair dryer. For example, surveillance footage shows Ting-Wei “Willy” Sun using the device to remove and reapply labels and serial number stickers from server boxes. This helped make the dummy servers look legitimate.
As pressure mounted before new export rules took effect, the urgency increased. In January 2025, Liaw wrote to an executive at the intermediary: “We need to speed these up before May 13!”.
As a result, between late April and mid‑May 2025 alone, $510 million worth of servers moved through the intermediary to China .
Arrests and Immediate Fallout
Liaw co‑founded Supermicro in 1993 and served as Senior Vice President of Business Development. Meanwhile, Ruei‑Tsang “Steven” Chang worked as a sales manager in Supermicro’s Taiwan office and Sun acted as an outside contractor, a “fixer” who allegedly aided the diversion.
On the 19th of March 2026, Liaw and Sun were arrested but Chang remains a fugitive. In response, Supermicro acted swiftly after the indictment. The company placed Liaw and Chang on administrative leave and terminated its relationship with Sun.
Furthermore, in a recently released statement, Supermicro said the alleged conduct “is a contravention of the company’s policies and compliance controls”. Because of this, shares plunged more than 25%, wiping out roughly $5 billion in market value.
Corporate and Market Reaction
Beyond the immediate arrests, the fallout spread quickly.
For example, shareholders filed a securities fraud lawsuit, accusing the company of hiding its reliance on Chinese sales. Bernstein analysts also questioned whether Nvidia might distance itself from Supermicro, which could impact the company’s GPU supply .
Additionally, the Nasdaq highlighted Supermicro’s troubled governance history. This includes a 2020 SEC settlement over accounting violations and the resignation of auditor Ernst & Young in late 2024. For investors, this case added another layer of uncertainty.
Supermicro Co-Founder Case: The Bigger Picture
Overall, the indictment marks the highest‑profile chip smuggling case since US export controls on Nvidia AI chips began in 2022. US Attorney Jay Clayton said, “Crimes involving sensitive technology must be met with swift action otherwise the law is meaningless” .
Moreover, Nvidia already stated that it works closely with customers and the government on compliance programs.
Ultimately, the “hairdryer heist” shows how far some will go to bypass export controls. For Supermicro, the fallout is only beginning. For the AI industry, the case raises urgent questions about supply chain integrity and the true cost of circumventing the law.
