Taiwanese prosecutors have indicted nine individuals, including a senior manager at Nvidia and two employees of Supermicro, for falsifying documents to smuggle high-end AI servers to China. The charges violate U.S. export controls.
The indictment, announced Monday, accuses the suspects of breach of trust and document forgery. One additional suspect remains at large, accused of diverting funds from a distributor involved in the operation. Officials confirmed the involvement of staff from both companies but did not release names.
Servers marked for Taiwan, shipped to China
Investigators discovered the group attempted to disguise 130 Nvidia B300 servers as destined for Taiwan. Instead, 74 were sent to Chinese customers, while Taiwanese customs intercepted the remaining 56 after detecting irregularities. The servers contained advanced AI chips restricted under U.S. rules.
The case emerged after U.S. authorities arrested Supermicro co-founder Wally Liaw in March. He was accused of funneling $2.5 billion worth of restricted AI servers to China since 2024. Taiwan launched its own investigation, revealing what prosecutors called a bold attempt to bypass controls.
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Both firms have faced compliance scrutiny. Nvidia CEO Jensen Huang publicly criticized Supermicro in May for weak oversight, demanding the company improve its compliance program. Supermicro later confirmed it terminated several employees linked to the scheme following an internal review but stated senior leadership was not involved.
Investors remain concerned. A securities fraud lawsuit has been filed against Supermicro, alleging the company failed to detect billions in illicit sales. The case questions whether internal controls were adequate or if executives ignored the problem.
Prosecutors stated the indicted employees knew the strict export procedures at both companies. As U.S. and Taiwanese controls tightened, the operation grew more aggressive.
Broader implications for export controls
The indictments coincide with U.S. efforts to restrict China’s access to advanced AI technology. The case demonstrates how easily controls can be bypassed. Customs officials and executives missed billions in fraudulent shipments until it was too late.
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Lauren Barden-Hair, an expert in China’s influence over multinational firms in Southeast Asia, wrote in an op-ed that the U.S. found a “nameless Southeast Asian firm” was “at the heart of the operation.” That firm allegedly coordinated with co-conspirators at Supermicro and Nvidia, succeeding for years at ensuring China wasn’t completely blocked from accessing Nvidia’s most advanced AI chips.
Barden-Hair noted that China’s financial influence extends beyond its borders. The lesson is not just that controls need strengthening but that the reach of such operations is often underestimated.
Nvidia has increased prices on AI servers by 15%, a move that could discourage illicit sales.
Neither company responded to requests for comment.