HiNews
Federal authorities have charged three individuals with conspiring to illegally divert billions of dollars’ worth of advanced U.S. artificial intelligence technology to China, in violation of strict export control laws designed to protect national security.
An indictment unsealed on March 19, 2026, in Manhattan federal court accuses Yih-Shyan “Wally” Liaw, a 71-year-old U.S. citizen from Fremont, California, and co-founder as well as a senior executive at a publicly traded American company that manufactures high-performance AI servers; Ruei-Tsang “Steven” Chang, a 53-year-old Taiwanese citizen and general manager of the company’s Taiwan office; and Ting-Wei “Willy” Sun, a 44-year-old Taiwanese citizen acting as a third-party broker.
Liaw and Sun were arrested and are expected to appear in federal court in the Northern District of California. Chang remains at large as a fugitive.
According to the Department of Justice, the defendants allegedly orchestrated a sophisticated scheme to bypass U.S. export restrictions on powerful AI graphics processing units (GPUs) and accelerator chips. These components, integral to high-performance servers for AI and cloud computing, require special licenses from the Department of Commerce due to their potential military applications and implications for U.S. national security.
The alleged plot involved placing orders through a Southeast Asia-based company (referred to as Company-1) that claimed to be the legitimate end user. Servers were assembled in the United States, shipped to Taiwan for initial delivery, then forwarded to Company-1. There, they were repackaged in unmarked boxes and rerouted to buyers in China. To maintain the deception, the group reportedly created false documents, used encrypted messaging to coordinate shipments, and even staged thousands of non-functional “dummy” servers during inspections—including audits by the manufacturer and Commerce Department officials. In one reported tactic, hair dryers were used to alter or remove labels and serial numbers from real equipment, swapping them onto fakes left behind.
Prosecutors say Company-1 purchased roughly $2.5 billion in servers from the U.S. manufacturer between 2024 and 2025, with at least $510 million worth diverted to China in a concentrated period from late April to mid-May 2025 alone.
Each defendant faces three felony counts: conspiracy to violate the Export Control Reform Act (up to 20 years in prison), conspiracy to smuggle goods from the United States (up to 5 years), and conspiracy to defraud the United States (up to 5 years). The charges are allegations, and the defendants are presumed innocent until proven guilty in court.
The investigation was led by the FBI’s Counterintelligence and Espionage Division and New York Field Office, in partnership with the Department of Commerce’s Bureau of Industry and Security and the Justice Department’s National Security Division.
Officials emphasized the broader stakes in curbing such diversions. Assistant Attorney General for National Security John A. Eisenberg stated, “These chips are the product of American ingenuity, and NSD will continue to enforce our export-control laws to protect that advantage.” FBI Assistant Director Roman Rozhavsky added that controlling sensitive AI exports remains a top priority to safeguard national security.
U.S. Attorney Jay Clayton for the Southern District of New York described the case as part of ongoing efforts against schemes that “generate billions of dollars in ill-gotten gains and pose a direct threat to U.S. national security.”
This case highlights the U.S. government’s intensifying crackdown on attempts to circumvent export controls on advanced AI technologies amid growing concerns over their transfer to adversaries.
