DOJ issued a truly stunning indictment today, unveiling a massive AI chip smuggling operation to China--led by Wally Liaw, the Co-Founder, Board Member, and Senior Vice President of Supermicro, a Fortune 500 company and one of the largest U.S. AI server manufacturers. The operation smuggled over $2.5 billion worth of chips to China, including Hopper and Blackwell chips. It is unsurprising that China would seek to illegally obtain U.S. chips, given how much better they are than Chinese chips. But it is appalling that leadership figures in major U.S. semiconductor companies would actively enable Chinese efforts to obtain banned AI chips. Many U.S. companies have long denied that chip smuggling to China is happening. And now we know that it is not just happening, but it is pervasive--and individuals high up in some of the most important companies in the AI supply chain were actively supporting those smuggling operations. Policy changes are urgently needed to close loopholes in AI chip export controls and stop Chinese smuggling. First, we need to know where these chips are going: all AI chip exports to Southeast Asia (the nexus of Chinese smuggling operations, including this operation), and potentially globally, must require a U.S. export license. Second, Chinese companies inside the United States should not be allowed to purchase AI chips. It is absurd that the only country in which Chinese companies can buy AI chips is the United States itself, a loophole that DOJ has highlighted in past indictments that Chinese smugglers routinely exploit. And third, much tighter compliance measures are needed by U.S. companies. U.S. companies have demonstrated that they cannot be trusted to self-police. Companies must have stricter end-use reporting requirements, and/or face stricter liability. Export control enforcement must become more like financial sanctions enforcement if it is to be effective. justice.gov/opa/pr/three-cha…