Supermicro smuggling charges
Supermicro shares plunged ~26.2% pre‑market after U.S. prosecutors charged a co‑founder in a $2.5B AI‑chip smuggling scheme to China — allegedly disguising shipments as 'hair dryers' and arresting two people (x.com) (x.com). The market move comes despite the company’s continued revenue growth, as investors price in legal and export‑control risk for an AI‑server supplier (x.com).
An indictment unsealed March 19, 2026 names Yih‑Shyan “Wally” Liaw, Ruei‑Tsang “Steven” Chang and Ting‑Wei “Willy” Sun; Liaw and Sun were arrested and presented in the Northern District of California while Chang is listed as a fugitive, and the case is assigned to U.S. District Judge Edgardo Ramos. (justice.gov 1) (justice.gov 2) Prosecutors say the defendants used a pass‑through company and transshipment routing through Taiwan and Southeast Asia, employed false documents and staged bogus “dummy” servers to conceal the real servers’ destination, and coordinated via encrypted messaging to hide the scheme. (justice.gov) (reuters.com) Indictment exhibits and reporting allege surveillance and warehouse photos show personnel using heat (including a hair dryer) to remove and reattach serial‑number stickers and other labels from genuine units onto non‑working replica servers before repackaging them for inspections. (thestack.technology) (tomshardware.com) The Justice Department says the conspiracy diverted roughly $2.5 billion in U.S.‑assembled servers overall, and that shipments worth more than $500 million were forwarded to China between April and mid‑May 2025, according to prosecutors. (reuters.com) (justice.gov) Supermicro says it was not named as a defendant, has cooperated with investigators, placed Liaw and the Taiwan sales manager on administrative leave and ended its relationship with the contractor identified in the indictment. (ir.supermicro.com) (reuters.com) The Southern District of New York and the Justice Department—working with the FBI and the Department of Commerce’s Bureau of Industry and Security—announced the charges and described the case as an alleged evasion of U.S. export‑control laws that investigators say generated billions in ill‑gotten gains. (justice.gov) (justice.gov) Reporting calculated the market impact of the filing would erase nearly $5 billion from Supermicro’s roughly $18.5 billion market value if losses held, and noted the company’s peak enterprise valuation reached about $67 billion in 2024 amid AI demand. (money.usnews.com) (forbes.com)
