Super Micro Shareholders Press Company For Damages Over Chip-Smuggling Controversy

• Shareholders reportedly alleged that Super Micro overstated its business prospects and ​inflated its stock price by knowingly failing to disclose that ⁠a significant portion of server sales went to companies in China. 
• The lawsuit is seeking unspecified damages for Super Micro investors between April 30, 2024, and March ​19, 2026, Reuters said.

Super Micro Computers (SMCI) shareholders have reportedly sued the server maker alleging securities fraud, opening the latest chapter of the chip-smuggling controversy that wiped out billions from the company’s valuation on Friday.

Last week, the U.S. charged three workers associated with Super Micro, including co-founder Yih-Shyan “Wally” Liaw, for their role in a scheme that enabled the smuggling of $2.5 billion worth of servers with Nvidia chips to China via Taiwan in violation of U.S. imposed chip export controls. A sales manager and a contractor were also charged and Liaw subsequently stepped down from the company’s board.

Reuters reported on Wednesday that shareholders have filed a proposed class action in San Francisco federal ​court. They reportedly alleged that Super Micro overstated its business prospects and ​inflated its stock price by knowingly failing to disclose that ⁠a significant portion of server sales went to companies in China.

The lawsuit is seeking unspecified damages for Super Micro investors between April 30, 2024, and March ​19, 2026, Reuters said. Shares of the company edged 0.5% lower in extended hours of trading at the time of writing.

SMCI’s Take On Indictment

SMCI distanced itself from the controversy last week, saying that the company was not named as a defendant in the indictment.

The company remains in full compliance with export rules and is cooperating fully with the government's investigation, it added.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around SMCI stock stayed within the ‘extremely bullish’ territory over the past 24 hours, while message volume stayed at ‘extremely high’ levels.

A Stocktwits user recommended buying the bad news.

SMCI stock has dropped 41% over the past 12 months. 

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