SMCI's Collaboration With Taiwanese Authorities Leads To Arrests — A Look At Jensen Huang's Advice To Super Micro

• Super Micro stated that these servers were deceptively acquired after being sold to an authorized reseller.
• The company said it had followed a rigorous vetting and review process that exceeded applicable regulatory requirements.
• Super Micro’s update comes days after Nvidia CEO Jensen Huang urged the company to tighten up its compliance processes.

Super Micro Computer Inc. (SMCI) announced on Thursday that its collaboration with Taiwanese authorities has led to the arrest of three suspects in a case involving the smuggling of AI servers into China.

Super Micro stated that the collaboration also helped prevent the smuggling of 50 of its servers into China and that these servers were deceptively acquired after being sold to an authorized reseller. The company had followed a rigorous vetting and review process that exceeded applicable regulatory requirements.

Super Micro shares were up more than 11% in Thursday morning’s trade. SMCI was among the top trending tickers on Stocktwits at the time of writing.

Jensen Huang’s Advice To SMCI

Super Micro’s update comes days after Nvidia Corp. (NVDA) CEO Jensen Huang urged the company to tighten up its compliance processes, according to a report by Bloomberg.

“Ultimately Super Micro has to run their own company. I hope that they will enhance and improve their regulation compliance and avoid that from happening in the future,” he told reporters in Taipei.

Super Micro builds servers powered by Nvidia AI chips, including high-end GB200, B200, H200, and H100 systems.

While NVIDIA’s chips have faced U.S. export restrictions targeting China in recent years, Beijing has also moved to curb the use of certain NVDA chips as part of efforts to strengthen its domestic semiconductor industry.

According to a Bloomberg report, Taiwanese authorities last week sought the detention of three individuals accused of forging documents to smuggle the servers into China in violation of U.S. export controls.

Super Micro had announced in April this year that it had launched an independent investigation into three individuals associated with the company regarding an alleged conspiracy to commit export-control violations.

SMCI Cofounder Indicted In Chip Smuggling Case

The U.S. Attorney’s Office for the Southern District of New York charged Super Micro co-founder Yih-Shyan “Wally” Liaw for allegedly diverting Nvidia-powered servers to China.

Liaw later resigned from Super Micro’s board, while the company maintained that it had neither been named as a defendant nor accused of any wrongdoing.

How Did Retail Investors React To SMCI?

Retail sentiment on Stocktwits around Super Micro trended in the ‘bullish’ territory at the time of writing.

One user believes that SMCI stock could hit a new all-time high, citing the company’s improving margins and its cooperation with the Justice Department.

SMCI stock is up 44% year-to-date, while NVDA stock is up 14%. The S&P 500 ETF Trust (SPY) is up 28% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 42%.

The iShares Semiconductor ETF (SOXX) is up 175% during this period, while the iShares Russell Mid-Cap ETF (IWR) is up 21%.

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