On March 19, 2026, the U.S. Department of Justice unsealed a federal indictment charging three people — Yih-Shyan “Wally” Liaw, Ruei-Tsang “Steven” Chang, and Ting-Wei “Willy” Sun — with conspiring to unlawfully divert high-performance servers packed with American AI technology to China, in violation of U.S. export controls. Liaw is a co-founder, board member, and senior vice president of business development at a publicly traded U.S.-based server manufacturer; Reuters identified the company as Super Micro Computer. Two of the defendants were arrested and presented in federal court; Chang remains at large.
The case matters beyond the headline numbers. It marks a sharp escalation in how the United States polices the AI hardware supply chain: not fines against companies, but criminal charges against named executives and middlemen, with maximum sentences measured in decades.
The Route: A Designed Diversion Pipeline
According to the indictment, Chang served as general manager of the manufacturer’s Taiwan office, while Sun worked as a third-party broker — described in the charging documents as a “fixer” — also based in Taiwan. Their alleged method was methodical. They directed executives of a Southeast Asia-based company, referred to in the indictment as “Company-1,” to place purchase orders. Servers were assembled in the United States, shipped to the manufacturer’s facilities in Taiwan, and delivered to Company-1 in Southeast Asia. There the equipment was repackaged in unmarked boxes and shipped onward to China, while the paperwork falsely presented Company-1 as the end user.
The scale was not small. Prosecutors say that between 2024 and 2025, Company-1 purchased roughly $2.5 billion worth of servers from the manufacturer. In a single window from late April to mid-May 2025, at least approximately $510 million of that equipment was allegedly diverted to China.
Dummy Servers and a Hair Dryer
The most striking details involve concealment. To pass an August 2025 audit by the manufacturer itself — and an inspection by the U.S. Department of Commerce — the co-conspirators allegedly staged thousands of “dummy servers” at Company-1’s facilities: outwardly identical units that were non-working replicas with no real computing capability. The indictment further describes Sun and another broker using a hair dryer to heat, remove, and reattach labels and serial-number stickers on equipment. Surveillance cameras recorded the relabeling.
These details matter legally. They are what separate an administrative export violation from a criminal conspiracy: systematic, planned falsification carried out with the knowledge that inspections were coming.
Three Charges and the Maximum Sentences
The indictment carries three counts: conspiracy to violate the Export Control Reform Act, with a maximum sentence of 20 years in prison; conspiracy to smuggle goods, with a maximum of five years; and conspiracy to defraud the United States, also with a maximum of five years. Liaw and Sun were arrested and appeared in the Northern District of California. Chang is considered a fugitive. The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York, and the investigation involved the FBI, the Commerce Department’s Bureau of Industry and Security, and the Counterintelligence and Export Control Section of the Justice Department’s National Security Division.
Assistant Attorney General for National Security John A. Eisenberg said the charges reflect the department’s commitment to aggressively investigate and prosecute those who would unlawfully divert cutting-edge American technology. FBI officials framed the case as a defense of U.S. technological advantage against foreign adversaries.
The New Normal of Export Enforcement
For anyone building or selling AI infrastructure, the signals are blunt. First, accountability has moved to individuals: the defendants here are executives and brokers, and the exposure is prison time, not a corporate fine. Second, transshipment through Southeast Asia is a watched path — a structure where the named buyer sits in Southeast Asia while the real user sits in China is exactly what federal investigators can now reconstruct, transaction by transaction. Third, physical audits are real, and fakery does not survive them; thousands of replica servers and a hair dryer ended up as exhibits in an indictment.
The timing is also notable. In the same week, the White House delivered its National Policy Framework for AI to Congress — a set of legislative recommendations we covered separately. Enforcement and legislation are advancing on parallel tracks, and the direction is clear: the U.S. effort to restrict the outflow of AI technology will intensify, not relax, in the months ahead.
Sources
- Three Charged with Conspiring to Unlawfully Divert Cutting Edge U.S. Artificial Intelligence Technology to China — U.S. Department of Justice
- US charges three people with conspiring to divert AI tech to China — Reuters
- Three Charged with Conspiring to Divert U.S. Artificial Intelligence Technology to China — U.S. Attorney’s Office SDNY
AI-assisted summary compiled from the sources above, reviewed by a human before publishing.