Megarobbery worth 2.5 billion dollars: Three accused of smuggling banned chips to China

Brains of the operation and reaction of the company

Of the three accused, two were arrested. Yih-Shyan “Wally” Liaw, co-founder, senior vice president and board member of Supermicro, was arrested in California, while Ting-Wei “Willy” Sun, an external associate of the Taiwan-based company, was also detained. A third man, Ruei-Tsang “Steven” Chang, who worked as a sales manager in Supermicro’s Taiwan office, is currently on the run.

The Supermicro company issued a statement in which it distanced itself from the defendants’ actions.

“The conduct of these individuals set forth in the indictment constitutes a violation of the company’s compliance policies and controls, including efforts to circumvent applicable export control laws and regulations,” the statement said. “Supermicro maintains a robust compliance program and is committed to full compliance with all applicable US export and re-export control laws and regulations.”

Scam with hair dryers and fake servers

The smuggling allegedly took place between 2024 and 2025, and the defendants managed to divert more than $510 million worth of Supermicro’s servers to China. In order to make the transactions look legitimate, the servers were ordered by a “transient” company from Southeast Asia, named in the indictment as Company-1. The servers would then be repackaged and shipped to China.

To fool inspections, the defendants used industrial hair dryers to peel off the serial number stickers from the real servers. These labels would then be pasted on “fake” servers that served only for inspection purposes, while the real, advanced equipment is more. was on her way to China.

Cutting-edge technology at the center of a technological war

The servers that were the subject of stealth contained advanced Nvidia graphics processors (GPUs) such as the H100 and H200 Tensor Core, which are key to training and running large language models (LLM). The indictment states that Liaw allegedly encouraged Company-1 to order the latest servers containing Nvidia’s B200, one of the most advanced GPUs of the time.

The United States introduced restrictions on the export of such chips to China as early as October 2022 in order to maintain an advantage in the development of artificial intelligence and prevent China from developing powerful models that could be used for decryption, autonomous weapon systems and cyber warfare.

Bypassing inspections and market consequences

Although physical inspections were carried out to prevent smuggling, this case shows how flawed they were. The indictment alleges that the audit took place in August 2025, but the person in charge of conducting the audit was allegedly not at the location, rather; enjoyed the entertainment paid for by Company-1. In order to make the audit “successful”, Sun sent the auditor photos and videos of fake servers with fake stickers.

After the US Bureau of Industry and Security (BIS) notified Supermicro that Company-1 was diverting orders to China, a second audit was scheduled. And she turned on the fake servers again, which eventually resulted in BIS blocking Company-1’s shipments.