Taiwan's Keelung District Prosecutors' Office raided Supermicro Computer's Taiwan office on Monday, along with the homes of six individuals and three affiliated company sites, expanding the island's first criminal investigation into the diversion of Nvidia AI chips to China. The six people searched were summoned for questioning, and Supermicro's shares fell 8% in U.S. trading, Bloomberg reports. The company said in a statement that it’s cooperating with authorities and remains “committed to protecting our advanced technologies and intellectual property.”
The probe extends beyond Supermicro itself, with investigators also searching Supermicro distributor Albatron Technology and data center operator Chief Telecom, according to a person familiar with the matter, as cited by Bloomberg. Albatron confirmed in an exchange filing that it had been searched, reporting no financial or operational impact, and its shares fell 10% in Taipei. Meanwhile, Chief Telecom said its operations remained normal, and its stock slid more than 2%.
Taiwanese law doesn’t classify the unauthorized export of AI chips to China as a crime, so prosecutors are currently leaning on liberal interpretations of existing statutes to build their case. Raids from last month that opened the investigation ultimately led to charges being laid against three suspects for falsifying shipping documents — not for breaching any export restrictions — after authorities seized roughly 50 Supermicro servers bound for China, Hong Kong, and Macau. Monday’s summonses follow the same pattern, with the six individuals questioned over document offenses rather than the exports themselves.
Taipei is currently considering new legislation that would restrict AI chip sales to every customer in China, not only blacklisted firms such as Huawei and SMIC, a change that would let prosecutors charge smuggling as an export crime for the first time. The measure is under discussion in trade talks with the United States and has not been finalized, so, until and if it passes, every action by Taiwanese officials will need to rest on forgery and fraud charges.
Meanwhile, the U.S. is prosecuting the same scheme under export-control law. A federal indictment charges Supermicro co-founder Yih-Shyan “Wally” Liaw with conspiring to divert roughly $2.5 billion in Nvidia-equipped servers to China through a Southeast Asian front company, using dummy servers and serial-number labels lifted with heat to deceive auditors. Liaw pleaded not guilty and was released on a $5 million bond, with a trial set for November 2nd, and faces up to 20 years if convicted.
It’s somewhat ironic that the jurisdiction that manufactures most of the world's advanced AI chips has the weakest legal mechanisms in place to stop their unlawful diversion. The GPUs at the core of both cases are fabbed by TSMC in Taiwan before assembly into Supermicro servers, yet to date, it’s only the U.S. that has enshrined specific offences of smuggling in law.
Monday’s raids represent the first time that distribution itself has been hit, with efforts so far only concerning the execs accused of orchestrating the smuggling scheme. Supermicro had said the earlier case showed the risk that arises when its products pass through multiple downstream parties beyond its direct control, and neither Albatron nor Chief Telecom has yet been charged.
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