Episode summary
Super Micro Co-Founder Charged With Smuggling Chips to China | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 7 min · Hosts: Carol Massar, Tim Stenovec · Guests: Bob Van Voris
Summary
Super Micro Computer shares fell more than 32% after the US charged co-founder Yih-Shyan “Wally” Liaw with allegedly diverting billions of dollars of Nvidia-powered servers to China in violation of export controls. Bob Van Voris said prosecutors have not charged Super Micro itself, but allege Liaw and two others used a Southeast Asian intermediary and fake documentation to move the servers onward to Chinese customers.
Van Voris said the indictment describes $2.5 billion of server sales and alleges the group tried to evade scrutiny from both Super Micro’s internal compliance teams and US authorities. The defendants include a Super Micro sales manager in Taiwan and a third-party contractor; one defendant is at large, while Liaw was released on $5 million bond and Steven Chong is being held.
The case adds a fresh overhang for a company that has already dealt with accounting problems and SEC scrutiny. Van Voris said the conduct allegedly began in 2024, when Super Micro was still grappling with those issues, and that a trial could expose evidence of internal control failures even if the company is not charged.
Key takeaways
- Bob Van Voris said prosecutors have not charged Super Micro, but they allege a co-founder and two others moved $2.5 billion of servers to China through a Southeast Asian company.
- The government says the scheme involved cutting-edge Nvidia chips targeted by US export controls beginning in 2022.
- Super Micro says it is cooperating with authorities and calls the alleged conduct a violation of its policies and compliance controls.
- Van Voris said the case could create a major stock overhang because a trial may bring disclosures about possible compliance failures inside the company.
- Liaw was released on $5 million bond, Steven Chong is being held, and Willie Sun remains at large.
Notable quotes
“Prosecutors haven't accused uh Super Micro Micro of any wrongdoing”
“sending $2.5 billion of servers to a company in Southeast Asia”
“they sent the servers to company one which then shipped them to Chinese customers in violation of US export controls according to the government”
“The alleged conduct is a contravention of the company's policies and compliance controls, including efforts to circumvent applicable export control laws and regulations”
“this is serious time and it's also uh you know an overhang for the company”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week with Carol Masser and Tim Stenc on Bloomberg Radio. I'm
Looking to shares a super micro computer. They're down more than 32% in a single session. This after the US charged a co-founder with illegally diverting billions of dollars in Nvidia powered servers to China, initiating its highest profile crackdown on alleged smuggling of restricted AI tech to the Asian country.
I want to bring in Bob Vanvoris, Bloomberg News legal reporter. He joins us from the US federal courthouse in New York City. Bob, what do prosecutors allege that Ye Shyen Wally Ly has done?
And is the and the company is it accused of any wrongdoing? Prosecutors haven't accused uh Super Micro Micro of any wrongdoing. Uh but it has charged a founder uh Wally Leah um who co-founded the company in in 1993 and he is charged with two others with sending $2.5 billion of servers to a company in Southeast Asia uh an unnamed company called company one in the charging papers.
uh they sent the servers to company one which then shipped them to Chinese customers in violation of US export controls according to the government. Um the uh two others included Steven Chong a uh manager a sales manager in the Taiwan office of Super Micro and a uh third party contractor named Willie Sun. All of these people face uh uh multiple charges of conspiracy.
The highest the the most they could serve in prison is 30 years on these charges. Um obviously a lot of time if they're convicted
And what has Super Micro said so far? Super Micro has pointed out that they are not charged in the in the complaint in the indictment that they have robust controls and that they have cooperated with the government and will continue to cooperate with the government.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us export controls
- chip/server smuggling
- china semiconductor trade
- government compliance scrutiny
- super micro legal trouble
Companies and tickers mentioned
- SMCI
- NVDA
- Super Micro Computer Inc.
- Nvidia Corp.
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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