Seventy-one years old, a company co-founder, and now in federal custody. Yih-Shyan “Wally” Liaw’s week went from boardroom to courtroom at a speed that rattled Wall Street.

Supermicro shares dropped 12% in after-hours trading on Thursday after federal agents arrested Liaw on charges of conspiring to smuggle $2.5 billion worth of Nvidia GPU-equipped servers to China, then plunged 33% in the following session. He has since departed the company’s board. Two others — Ruei-Tsang “Steven” Chang, a general manager in Supermicro’s Taiwan office, and third-party broker Ting-Wei “Willy” Sun — were also charged. Chang remains at large.

The Scheme

According to the Department of Justice, the three defendants used a Southeast Asian intermediary to place orders with Supermicro, then diverted finished servers through Taiwan to China between 2024 and 2025. They allegedly fabricated compliance documents, used encrypted messaging to coordinate shipments, and built thousands of non-functional “dummy” servers to fool warehouse inspectors during audits. In one three-week stretch in spring 2025, roughly $500 million in hardware moved through the pipeline, according to Fortune.

The charges carry up to 20 years in prison.

Market in Freefall

The 33% single-day drop is punishing for a company already bruised by prior accounting troubles and a brush with Nasdaq delisting. Supermicro itself was not named as a defendant, and CEO Charles Liang was not charged. The company said the alleged conduct “contravene[d] the Company’s policies” and pointed to its compliance programme.

But the market’s verdict was swift. A co-founder arrested, a board seat vacated, and a fugitive employee — that is not a containable legal footnote. It is a crisis of confidence in a firm that builds critical AI infrastructure.

The speed here matters. Indictment unsealed, arrest made, board departure announced, stock demolished — all within 48 hours. For investors trying to price in the risk, the signal is clear: the DOJ moved fast because it wanted to.

Sources