Three individuals, including a senior vice president of Super Micro Computer Inc., have been charged with conspiring to smuggle advanced artificial intelligence technology to China.
The indictment, issued on Thursday in Manhattan federal court, accuses the defendants of violating U.S. export control laws by attempting to divert billions of dollars’ worth of high-performance computer servers, which are equipped with Nvidia chips, to China between 2024 and 2025.
According to FBI Assistant Director in Charge James C. Barnacle Jr., the accused used falsified documents, staged fake equipment to pass audits, and employed a pass-through company to hide their activities and true clientele.
U.S. Attorney Jay Clayton commented that such schemes represent a “direct threat to U.S. national security.” This case underscores the intensifying rivalry between the U.S. and China in the field of artificial intelligence, reminiscent of historical arms races, particularly the race to develop nuclear capabilities during World War II.
The chips produced by Nvidia are critical components for data centers that support artificial intelligence technologies. In response to the escalating competition, President Joe Biden has placed restrictions on the sale of Nvidia’s AI chips to China, a stance originally initiated during Donald Trump's presidency. The previous administration had begun to ease restrictions on lower-tier AI chips in exchange for a commission to the U.S. government. Despite this, Nvidia has not included any potential sales to China in its latest financial forecasts.
The three men charged are Yih-Shyan “Wally” Liaw, 71, a U.S. citizen and senior vice president of Super Micro Computer; Ting-Wei “Willy” Sun, 44, a contractor for the company; and Ruei-Tsang “Steven” Chang, a sales manager based in Taiwan who is currently a fugitive. Liaw was arrested in California, while Sun, a Taiwanese citizen, is awaiting a bail hearing. The representation for these individuals has not been disclosed.
The indictment alleges that Liaw and Chang directed a Southeast Asian company to place orders for $2.5 billion worth of servers from Super Micro Computer within the specified time frame. As the investigation progressed, authorities indicated that the operation became increasingly blatant, with at least $510 million worth of servers being diverted to China after they were assembled in the United States.
While the indictment does not name the Southeast Asian company involved, Super Micro Computer Inc. acknowledged the affiliations of the arrested men and stated that their actions were contrary to the company’s internal policies and compliance controls concerning export laws.
Super Micro Computer emphasized its commitment to full compliance with U.S. export regulations and noted that it has been cooperating with the investigation. Nvidia also released a statement highlighting that strict compliance with export regulations is a priority for the company, asserting that unlawful diversion of controlled technology to China is detrimental and that it does not support such systems.
Despite the restrictions on sales to China, Nvidia has experienced significant financial growth, with its market value skyrocketing from approximately $400 billion at the end of 2022 to $4.3 trillion, making it the most valuable company globally. Recently, Nvidia's CEO Jensen Huang projected that the company would soon have a $1 trillion backlog in chip orders, a substantial increase from the previous year.
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Source: SecurityWeek News