Supermicro’s co-founder allegedly smuggled $2.5 billion in Nvidia-chipped servers to China—now the whole company is under the microscope

Super Micro Computer will report third quarter earnings on Tuesday with two potentially explosive problems on its hands at once.

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The first is that CEO and chairman Charles Liang told investors the server manufacturing company could hit $40 billion in revenue this fiscal year. Liang called the target “conservative,” when he first discussed it with investors, but that was before another problem erupted.

The second, and much more catastrophic issue, is that six weeks ago prosecutors charged Supermicro co-founder Yih-Shyan “Wally” Liaw and two others with allegedly conspiring to route $2.5 billion in servers studded with Nvidia chips through a front company in Southeast Asia. Prosecutors have alleged in the indictment that Liaw was the mastermind behind a scheme that allegedly involved filling a warehouse full of thousands of fake servers affixed with shipping labels attached using hair dryers to peel them off packages to fool auditors when the real buyers were in China. Liaw was a board member and senior vice president of business development at the time, although he resigned all his positions the day following his arrest on March 19.

Liaw, who has pleaded not guilty, co-founded Supermicro in 1993 along with Liang, and Liang’s wife, Sara Liu, who is also a board member. Neither Supermicro, Liang, nor Liu were named in the indictment. Liang, in a letter to investors, said Supermicro is a victim in the alleged scheme and is cooperating with authorities.

But at this point, not being named in the indictment is not the same as being entirely in the clear. The company has launched its own internal investigation to be led by the board’s lead independent director Scott Angel and board audit chair Tally Liu. In turn, Liu and Angel have hired law firm Munger, Tolles & Olson, which brought in forensic consultant AlixPartners. The probe could run for months and result in a plethora of management or board changes, including potentially determining whether the Department of Justice ever charges the company itself with wrongdoing—or gives it a break for cooperating and offering evidence from its own internal dig.

“All eyes will be watching the company now, including very much the Department of Justice, the Securities and Exchange Commission, and the new auditors, BDO USA,” said Brian Burke, a litigator and board advisor who has led hundreds of internal investigations.

Burke said the investigation could result in a spectrum of possible outcomes that could deal major to minimal disruption to Supermicro’s operations. Significant problems found in the investigation could move the markets and the stock price, he said, and could lead to a major shakeup at the highest levels.

“Findings could result in major disruption to the company’s market capitalization, management personnel, the makeup of management, and the makeup of the board,” said Burke.

For now, the company has said it won’t comment on the investigation or on another concurrent internal review it is conducting into its global trade compliance program to be led by general counsel Yitai Hu, and Supermicro’s newly named chief compliance officer, DeAnna Luna. Luna reports to Hu, who reports to Liang, and the findings of both probes will go directly to the independent board members, the company said.

The Investigation

David Rybicki, co-leader of law firm K&L Gates’ white collar defense and investigations practice group, said the investigation is likely to involve a comprehensive review of Supermicro’s IT systems, communications, and phone records, and will go well beyond the scope of a standard audit. Executives will have their work phones imaged, emails searched, and will be asked to sit for extensive interviews with the board’s lawyers. Most executives are likely to hire their own legal counsel, given the stakes. The worst outcome for Supermicro, said Rybicki, would be an investigation that the DOJ doesn’t trust.

“When you have these kinds of high profile catastrophic compliance failures, I think it’s fair to say they can be fatal for a company,” said Rybicki. That Supermicro was not indicted means it is “essential” for Supermicro to conduct a truly searching independent investigation with no interference or tampering from interested parties, given Liaw’s senior title and service as a board member, said Rybicki.

“Obviously there were serious compliance failures with an entire fake company and Potemkin warehouse set up, based on the allegations in the indictment,” said Rybicki. “This was a pretty sophisticated scheme, and one apparently that was not detected by the compliance function.”

According to the indictment, Liaw and two other lower-level workers in 2024 and 2025 allegedly cooked up an elaborate plan to sell Supermicro’s servers to an unnamed company based in Southeast Asia to obscure the real buyers of the servers, who were in China. The Department of Commerce requires that companies get specific licenses for the export of AI chips to Ch