Super Micro Computer shares plunged by 33% Friday after a co-founder of the company was indicted for concealing shipments of servers to China that contained banned NVIDIA chips used in artificial intelligence technology.
A copy of the indictment can be found here.
The United States Attorney for the Southern District of New York, Jay Clayton, Assistant Director of the Counterintelligence and Espionage Division of the Federal Bureau of Investigation (“FBI”), Roman Rozhavsky, and Assistant Director in Charge of the New York Field Office of the FBI, James C. Barnacle, Jr., announced the Indictment charging YIH-SHYAN “Wally” LIAW, RUEI-TSANG “Steven” CHANG, and TING-WEI “Willy” SUN, for conspiring to divert high-performance computer servers assembled in the United States and integrating sophisticated U.S. artificial intelligence technology to China, in violation of U.S. export controls laws. LIAW, a U.S. citizen, and SUN, a citizen of Taiwan, were arrested today and presented in the Northern District of California. CHANG, a citizen of Taiwan, remains a fugitive. The case has been assigned to U.S. District Judge Edgardo Ramos.
“As alleged in the Indictment, the defendants participated in a systematic scheme to divert massive quantities of U.S. artificial intelligence technology to customers in China,” said U.S. Attorney Jay Clayton. “They did so through a tangled web of lies, obfuscation, and concealment—all to drive sales and generate revenues in violation of U.S. law. Diversion schemes like those disrupted today generate billions of dollars in ill-gotten gains and pose a direct threat to U.S. national security. Crimes involving sensitive technology must be met with swift action otherwise the law is meaningless. I commend the women and men of our Office, the FBI, and the Department of Commerce for their swift action in identifying, charging, and stopping this brazen evasion of our laws that protect national security and U.S. competitiveness. We will continue to doggedly investigate and prosecute these illegal diversion schemes.”
“The FBI’s investigation revealed that Liaw, Chang, and Sun allegedly conspired to sell billions of dollars’ worth of servers integrating sensitive, controlled graphic processing units to buyers in China, in violation of U.S. export control laws,” said Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence and Espionage Division. “Controlling the export of sensitive U.S. artificial intelligence technology is essential to safeguarding our national security and defending the homeland. That’s why combating export violations is among the FBI’s highest priorities, and we will continue working with our law enforcement, private sector, and international partners to bring to justice all who take action to undermine U.S. national security.”
The company released the following statement below on Friday:
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Supermicro was informed today that the United States Attorney’s Office for the Southern District of New York has unsealed an indictment of three individuals associated with the Company in connection with an alleged conspiracy to commit export-control violations.
Supermicro is not named as a defendant in the indictment. The individuals charged are Yih-Shyan “Wally” Liaw, Senior Vice President of Business Development and a member of the Company’s Board of Directors; Ruei-Tsang “Steven” Chang, a sales manager in Taiwan; and Ting-Wei “Willy” Sun, a contractor. Supermicro has placed the two employees on administrative leave and terminated its relationship with the contractor, effective immediately.
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. Supermicro maintains a robust compliance program and is committed to full adherence to all applicable U.S. export and re-export control laws and regulations.
The Company has been cooperating fully with the government’s investigation and will continue to do so. Supermicro has not been named as a defendant in the indictment.
