Supermicro co-founder Wally Liaw and two others face federal charges for allegedly conspiring to illegally ship $2.5 billion worth of Nvidia's AI chips to China, marking the largest US enforcement action against chip diversion to date.

The indictment alleges the defendants used a Southeast Asian company as a pass-through entity to route Nvidia's H200 chips from Taiwan to China between April and May 2025. Supermicro servers were repackaged and shipped in unmarked boxes to conceal their contents, resulting in $99.7 million in revenue from the illicit operation in Q4 2024.

Nvidia shares fell 2.3% in after-hours trading as the case intensifies scrutiny of the company's compliance with US export restrictions. Nvidia maintains strict controls while acknowledging the "unlawful diversion" of its technology, though CEO Jensen Huang previously dismissed smuggling claims as lacking evidence.

This case follows similar arrests in Los Angeles and Texas, highlighting escalating US efforts to prevent AI chip transfers to China despite Nvidia's lobbying against export limits. Supermicro maintains its compliance program remains robust, though its CFO was replaced after an unrelated 2024 audit scandal.