US charges 3 people tied to Super Micro Computer with conspiring to divert AI tech to China

By Kanishka Singh and Karen Freifeld

WASHINGTON, March 19 (Reuters) - Three people associated with AI-optimized server maker Super Micro Computer Inc SMCI.O, including its co-founder, were charged with conspiring to unlawfully divert U.S. artificial intelligence technology to China, the U.S. Justice Department said on Thursday.

The FBI said Yih-Shyan Liaw, Ruei-Tsang Chang, and Ting-Wei 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." Many high-performance AI computer servers are made with Nvidia NVDA.O chips, some of which are subject to export controls.

San Jose, California-based Super Micro Computer said it was informed by federal prosecutors of the indictment on Thursday and that the company itself was not named as a defendant in it.

The company also said it placed Liaw and Chang on leave and terminated its ties with Sun, who was a contractor. Super Micro's shares were down 8% after the news.

Liaw co-founded Super Micro Computer in 1993, and joined its board of directors in 2023.

The DOJ accused the three people of participating in a systematic scheme to divert large quantities of AI technology to customers in China.

The DOJ statement did not mention Super Micro by name.

It, however, said Liaw is a "co-founder, board member, and senior vice president of business development of a publicly traded U.S.-based manufacturer that designs and builds high-performance computer servers for artificial intelligence and cloud computing applications, including servers that integrate artificial intelligence graphics processing units (GPUs)."

Chang was a sales manager in the Taiwan office of Super Micro Computer, while Sun was a contractor.

The DOJ indictment was unsealed on Thursday in a Manhattan federal court. The DOJ said Liaw, a U.S. citizen, and Sun, a citizen of Taiwan, were arrested on Thursday while Chang, a citizen of Taiwan, remains a fugitive.

"Together, the defendants and others conspired to systematically divert the U.S. manufacturer's servers with certain GPUs to China without a license to do so from the U.S. Department of Commerce," the U.S. DOJ said.

The defendants allegedly fabricated documents, staged bogus equipment to pass audit inventories, and used a pass-through company to conceal misconduct and true clientele lists, the DOJ said.

Super Micro said it was cooperating with the government's probe.

"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," Super Micro said.