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Supermicro and the ghost of Chinagate: The evolution of a multinational scam

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by Lauren Barden-Hair, opinion contributor - 05/03/26 11:00 AM ET

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by Lauren Barden-Hair, opinion contributor - 05/03/26 11:00 AM ET

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The Nvidia Context Memory Storage SuperMicro air-cooled displayed on the exhibition floor at the Nvidia GTC conference in San Jose, California, US, on Tuesday, March 17, 2026. Nvidia Corp. Chief Executive Officer Jensen Huang said the company is firing up manufacturing of H200 AI accelerators for customers in China, a sign of progress in the chipmaker’s effort to reenter the vital market. Photographer: David Paul Morris/Bloomberg via Getty Images

On March 19, the Justice Department announced the arrest of Supermicro co-founder Wally Liaw for his role in illegally funneling an estimated $2.5 billion worth of restricted AI servers to China. Although most coverage has fixated on the audacity of Liaw’s crimes, a more critical aspect of the scandal has drawn far less attention.

Buried in the Justice Department’s press release are revealing details about how the scheme actually worked — and why it eluded U.S. export controls for so long.

The key to Liaw’s success, the report confirms, was a nameless Southeast Asian firm at the heart of the operation. Executives at this unnamed company coordinated with Supermicro conspirators to place orders and provide false documents. Once the servers were received, the orders were sent forward to China, with staggering success. For nearly two years, U.S. export controls were thrown off the scent, enabling increasingly daring deals by the Supermicro team.

Why wasn’t the smuggling caught sooner? One could argue that the scheme was too elaborate — that an already over-stretched export control apparatus had little chance of catching it. But the frustrating reality is that the Supermicro disaster isn’t a failure of resources, but rather a failure of institutional memory.

In 1998, the Senate Committee on Governmental Affairs investigated what came to be known as “Chinagate” — the campaign finance scandal surrounding the 1996 elections. Its report concluded that China had used southeast Asian companies in an attempt to influence election outcomes, with strong evidence that “the use of businesses and individuals as intermediaries [was] becoming increasingly common among Chinese intelligence and military organizations.”

A central target of the investigations was Lippo Group, a sprawling Indonesian conglomerate run by Mochtar Riady and his son James, implicated for funneling foreign money into U.S. politics.

Lippo Group was Indonesian, not Chinese, but the Senate’s report concluded that the Riadys “had a long-term relationship with a Chinese intelligence agency.” Furthermore, in the decade prior, Lippo Group had established deep links with Chinese state banks and the firm China Resources, an entity identified by U.S. intelligence as a front for Chinese military and intelligence operations.

Throughout the congressional investigations, what emerged was a clear strategic play: Beijing cultivated business moguls based outside its sovereign territory, specifically firms with commercial exposure inside China and financial relationships with its state-linked entities. The fact that Lippo Group was headquartered in Jakarta, not Beijing, was precisely the point; its location outside China was the ideal cover.

The unnamed Asian company in this indictment bears a stark resemblance to the one in the Chinagate scandal. Its identity remains unconfirmed, but the Singapore-based computing firm Megaspeed is actively being investigated by the U.S. Commerce Department for precisely the same crime. And the parallels here with Chinagate are undeniable.

Like Lippo Group, Megaspeed is incorporated outside China, owned by Singapore citizens, giving it a corporate structure that, on paper, places it beyond Beijing’s reach. Yet reports show Megaspeed is an offshoot of 7Road International, a Chinese gaming company backed by state-connected investors. Sen. Tom Cotton has even called Megaspeed a “Chinese government spin-off.” The company’s rapid ascent to become the single largest Southeast Asian buyer of Nvidia chips raises the same questions that ultimately ensnared the Riadys: Who is really behind this firm, and whose interests does it serve?

It is easy to point out errors in judgment after a disaster, and U.S. export control authorities deserve support and praise for their efforts to protect national security. But it is important that we take the right lessons from the Supermicro scandal amid our shaming of the guilty, and remember the hard-earned lessons of the past. With the anonymous c