Allegations of illegal Nvidia chip shipments to China rattle investor confidence
Shares of Super Micro Computer (SMCI) fell sharply—dropping as much as 28%—after U.S. prosecutors unsealed an indictment accusing company insiders of illegally exporting AI servers containing Nvidia chips to China, in violation of federal export controls.
According to the U.S. Attorney’s Office for the Southern District of New York, three individuals—including co-founder Yih-Shyan Liaw—were charged in connection with an alleged scheme to ship approximately $2.5 billion worth of U.S.-made servers to China between 2024 and 2025. Also charged were a Taiwan-based sales manager and a contractor described by authorities as a “fixer.”
Prosecutors allege the group used a Southeast Asian intermediary to disguise the final destination of the technology. The indictment claims that documents were falsified and “dummy” servers were staged for inspection, while the actual high-performance AI systems were redirected to China, a restricted market under U.S. export laws.
Supermicro responded swiftly, placing the two employees on administrative leave and terminating its relationship with the contractor. The company has not been formally charged but faces renewed scrutiny due to its central role in the AI hardware supply chain. Supermicro assembles servers powered by Nvidia chips and accounts for a notable portion of Nvidia’s revenue tied to AI infrastructure.
The development adds to a series of challenges for the company. After a strong rally in 2024 fueled by surging demand for AI servers, Supermicro’s stock has declined significantly over the past year amid concerns over governance, delayed financial filings, and prior allegations from short sellers. While an independent review in late 2024 found no substantial accounting issues, investor confidence remains fragile.
The latest indictment raises broader questions about compliance risks in the rapidly expanding AI hardware market, where geopolitical tensions and export restrictions are increasingly shaping industry dynamics. As regulators intensify enforcement, companies operating in this space may face heightened scrutiny, particularly when navigating global supply chains tied to sensitive technologies.
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