Supermicro Launches Internal Investigation After Cofounder’s Arrest on $2.5B Chip Smuggling Charges

(SeaPRwire) –   Two members of Supermicro’s board are leading an internal inquiry following federal charges that one of the company’s co-founders was involved in orchestrating the illicit shipment of $2.5 billion worth of servers, equipped with high-demand Nvidia GPUs, to China, thereby contravening export regulations.

This new independent investigation follows a similar one conducted two years prior by an independent director, which found “no evidence of fraud or misconduct on the part of management or the board of directors.” Investors are expressing concern over Supermicro’s compliance issues and the potential reputational damage, which could negatively impact its relationship with Nvidia, a major chip supplier for Supermicro’s customer orders.

The company announced on Tuesday that Scott Angel, the board’s newest director and designated independent leader, is heading the current investigation, alongside Tally Liu, the chair of the audit committee. While specific details of the investigation remain limited, the board has engaged the law firm Munger, Tolles & Olson to provide counsel to the independent directors. Munger, Tolles & Olson has enlisted the consulting firm AlixPartners for its expertise in forensic accounting and auditing. These firms will collaborate with Supermicro’s auditor, BDO USA, and will “report their findings directly” to Angel and Liu, according to the company.

Last month, the Department of Justice indicted Supermicro co-founder Yih-Shyan “Wally” Liaw and two other individuals, accusing them of conspiring in 2024 and 2025 to route Supermicro servers to an unspecified Southeast Asian company, which served as a front for the actual buyers in China. The indictment alleges that Liaw, Ruei-Tsang “Steven” Chang, and Ting-Wei “Willy” Sun arranged for thousands of counterfeit replica servers to be stored in a warehouse to deceive government auditors tasked with ensuring the technology was not being sent to unauthorized recipients. The group reportedly assembled a team in Southeast Asia to set up these fake servers, even arranging for their meals and transportation. The indictment further claims the trio went to extreme measures to conceal their actions, such as using hair dryers to remove original packaging labels, which were then reapplied to the thousands of fake replica servers.

During the period specified in the indictment, Liaw held a position as a board member and senior executive. He co-founded the company in 1993 with CEO and chairman Charles Liang and Liang’s wife, Sara Liu. (Supermicro has confirmed that Sara Liu is not related to Tally Liu.) Supermicro itself was not named in the indictment and has stated its cooperation with the government.

Liaw retired in February 2018, following a third board-led investigation related to a Nasdaq delisting and an SEC inquiry into its accounting practices, which resulted in Supermicro reaching a settlement with regulators and paying a $17.5 million fine. Subsequently, Liaw served as president for the French server company 2CRSi from June 2020 to April 2021, before returning to Supermicro as a consultant in May 2021. He rejoined as a full-time executive in August 2022 and was reinstated to the board in December 2023. He resigned from the board on March 20, the day after his arrest.

Authorities have reported that Liaw and Sun have pleaded not guilty, while Chang remains at large. Supermicro CEO Liang has informed investors that the company considers itself a victim of the alleged scheme.

“Our internal review and the independent directors’ investigation are being conducted in line with our commitment to ensuring our technology is handled with the highest level of ethical and legal scrutiny,” Liang stated on Tuesday.

2024 internal investigation found no evidence of circumventing export controls

Supermicro’s most recent board-led independent investigation took place in 2024, prompted by the unexpected resignation of its auditor, Ernst & Young, midway through an audit. EY cited in its resignation letter that it could no longer rely on Supermicro’s management.

Supermicro then faced the risk of delisting from Nasdaq due to its failure to file audited financial statements on time. In response, the board appointed its then-newest director, Susie Giordano, to lead a special committee of one to conduct an investigation. In 2024, Giordano collaborated with the law firm Cooley and the forensic accounting firm Secretariat Advisors. Giordano’s review encompassed the rehiring of employees “who resigned in 2018” following the 2017 investigation, export control matters concerning the prevention of sales or diversion to restricted countries, and current sales and revenue recognition practices around quarter-ends.

The committee examined 11 export transactions and “did not see any evidence suggesting that anyone at the company tried to circumvent export control regulations or restrictions, or that anyone at the company was aware that any of its products might be diverted to a prohibited end user or location.” The committee also found no products sold to Russian customers or shipped to Russia “in violation of export controls or sanctions laws that were in place when products were shipped.” Disclosures to investors regarding the 2024 investigation did not mention China.

Based on the findings of that independent probe, the committee recommended that Supermicro’s CFO, David Weigand, be replaced by a “new CFO with extensive experience working as a senior finance professional at a large public company.” Weigand continues to serve as CFO. Other recommendations from the committee included appointing a general counsel and expanding the legal department, as well as appointing a chief compliance officer and a chief accounting officer.

Concurrently with the latest board investigation, Supermicro also announced the commencement of an internal review of its global trade compliance program, under the leadership of general counsel Yitai Hu. All findings will be reported directly to the independent board directors, the company stated.

Angel joined the board in March 2025, bringing 37 years of experience in audit and assurance from Deloitte, including over two decades in Silicon Valley. Liu joined the board in 2019 after retiring as CEO of the supply chain solutions company Wintec Industries.