TLDR
- Supermicro is cooperating with Taiwanese authorities after three suspects were arrested and 50+ servers were seized that were being illegally diverted to China.
- Two former employees and a contractor face federal charges under the Export Control Reform Act for allegedly shipping Nvidia-powered servers to China without the required Commerce Department license.
- U.S. officials allege the trio used hair dryers to remove labels and serial numbers from real machines, placing them on dummy units to conceal shipments.
- The alleged scheme generated around $2.5 billion in sales since 2024, with $510 million sold between late April and mid-May 2025 alone.
- SMCI stock fell 1.2% in premarket trading Thursday; a trial is reportedly set for early November.
Super Micro Computer (SMCI) fell 1.2% in premarket trading on Thursday after the company confirmed it is cooperating with Taiwanese authorities in a server smuggling investigation that has now resulted in three arrests and the seizure of more than 50 servers.
Super Micro Computer, Inc., SMCI
The servers were originally sold by Supermicro to an authorized reseller but were then deceptively acquired and rerouted to China, a restricted market.
Supermicro said its vetting process exceeded government requirements, but the products moved through multiple downstream parties beyond its direct control.
The company said it will continue working with law enforcement in the U.S., Taiwan, and other jurisdictions to ensure its technology is distributed lawfully.
This latest development follows an April announcement from Supermicro that it had launched an independent investigation into allegations that two former employees and a contractor illegally shipped Nvidia-powered servers to China.
A federal indictment unsealed last month named Yih-Shyan “Wally” Liaw, Ruei-Tsan “Steven” Chang, and Ting-Wei “Willy” Sun. Liaw co-founded Supermicro in 1993 and joined its board in 2023. Chang served as a sales manager in Supermicro’s Taiwan office. Sun was a contractor.
All three are accused of violating the Export Control Reform Act. Supermicro held no U.S. Commerce Department license to export servers featuring Nvidia (NVDA) GPUs to China.
How They Allegedly Hid the Shipments
U.S. officials allege the trio took steps to conceal their actions from both U.S.-based manufacturers and export control authorities.
According to the indictment, they used hair dryers to strip labels and serial numbers from the real machines, then placed those labels onto dummy units left behind after the actual servers had been shipped to China.
The alleged operation generated approximately $2.5 billion in sales for the server maker since 2024. Around $510 million of that came from a single Southeast Asian intermediary between late April 2025 and mid-May 2025, which then passed the servers on to China.
Case Status
Liaw and Sun pleaded not guilty in a New York City courtroom earlier this month. Chang, the Taiwan-based sales manager, has not yet been apprehended.
A trial is reportedly scheduled for early November.
The case has also been linked to a reported loss of a contract with Oracle, though that has not been independently confirmed.
Supermicro posted fiscal Q3 2026 earnings that beat expectations, with non-GAAP EPS of $0.84 against a consensus of $0.62. The company, which has generated $33.7 billion in revenue over the last twelve months, recently appointed Matthew Thauberger as Chief Revenue Officer.
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