Shares of Super Micro Computer (SMCI) declined 1.2% during Thursday’s premarket session following the company’s announcement that it is assisting Taiwanese law enforcement in an investigation into server diversion that has led to three arrests and the confiscation of over 50 servers.
Super Micro Computer, Inc., SMCI
The servers in question were initially purchased from Supermicro through an authorized distribution channel but were subsequently obtained through deceptive means and illegally redirected to China, a restricted destination.
Supermicro stated that its verification procedures went beyond federal mandates, though the products changed hands through several intermediaries outside the company’s immediate oversight.
The technology firm emphasized its commitment to collaborating with regulatory agencies across the United States, Taiwan, and additional regions to guarantee proper distribution channels for its products.
This incident builds upon an earlier April disclosure when Supermicro revealed it had initiated an internal probe into accusations that two former staff members and an external contractor unlawfully exported Nvidia-equipped servers to Chinese markets.
The unsealed federal indictment from last month identifies Yih-Shyan “Wally” Liaw, Ruei-Tsan “Steven” Chang, and Ting-Wei “Willy” Sun as the accused parties. Liaw was instrumental in establishing Supermicro in 1993 and became a board member in 2023. Chang held a sales management position at Supermicro’s Taiwan headquarters. Sun worked as an independent contractor.
The three defendants face charges of breaching the Export Control Reform Act. Supermicro did not possess the necessary U.S. Commerce Department authorization to ship servers containing Nvidia (NVDA) graphics processing units to Chinese buyers.
Federal prosecutors contend the three individuals implemented various tactics to hide their activities from American manufacturers and regulatory oversight bodies.
The indictment details how they allegedly utilized hair dryers to remove identification labels and serial codes from genuine equipment, subsequently affixing those markers onto substitute units that remained after the authentic servers had been transported to China.
The suspected scheme purportedly generated roughly $2.5 billion in revenue for the server manufacturer beginning in 2024. Approximately $510 million originated from transactions with a single Southeast Asian intermediary during the brief window between late April 2025 and mid-May 2025, which subsequently forwarded the equipment to Chinese destinations.
Liaw and Sun entered not guilty pleas during a New York City court hearing earlier this month. Chang, who managed sales operations from Taiwan, remains at large.
Court proceedings are scheduled to commence in early November.
The investigation has also been connected to an alleged termination of business dealings with Oracle, though this connection remains unverified through independent sources.
Supermicro delivered fiscal Q3 2026 financial results that surpassed analyst projections, recording non-GAAP earnings per share of $0.84 compared to the anticipated $0.62. The enterprise, which has accumulated $33.7 billion in revenue throughout the trailing twelve months, recently named Matthew Thauberger to the position of Chief Revenue Officer.
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