Taiwan moves to prosecute Nvidia, Super Micro staff over illegal ‌AI server export to China

Nvidia (NASDAQ: NVDA) and Super Micro (NASDAQ: SMCI) staffers were among the nine facing prosecution in Taiwan after prosecutors initiated charges against the group accused of operating a shadow route where AI servers somehow landed in China, even though those specific shipments are currently banned. 

The Nvidia employee linked to the illegal export of AI servers to China has been detained since July. Super Micro terminated the employment of the staffers implicated in the same $2.5 billion smuggling probe.

How did Nvidia and Super Micro staff illegally reroute AI servers to China?

According to Taiwanese prosecutors, the group they are building cases against was forging shipping export documents and shipping records to hide the trail of the chips they were illegally redirecting to China.

The hardware at the heart of the case is built by Super Micro Computer and runs on Nvidia processors. However, the US already set up licensing requirements in 2022 for anyone looking to deploy that specific hardware class in China, Hong Kong and Macau. 

Where the $2.5 billion case started

Taipei already had a case against three people held by authorities on these accusations, even before the July detention of the Nvidia employee was disclosed. 

However, the legal trail goes further back to March. The US Attorney’s Office for the Southern District of New York named Super Micro co-founder and board member Yih-Shyan “Wally” Liaw, Taiwan-based sales manager Ruei-Tsan “Steven” Chang and contractor Ting-Wei “Willy” Sun, as the brains behind a $2.5 billion Nvidia server smuggling operation into China. 

Yih-Shyan “Wally” Liaw has a $464 million stake in Super Micro.  

Others implicated in the chip smuggling ring include a Southeast Asian firm that provided fake records in a middleman role, as Cryptopolitan reported, citing filings. 

Super Micro and Nvidia have distanced themselves from chip smuggling

Super Micro has quickly moved to sever ties with anyone with serious involvement in the server rerouting operation, firing staff with exposure and investigating top leadership for compromise. 

The firm has stressed that it is not a defendant in the US case. 

Nvidia CEO Jensen Huang also told reporters at Songshan airport during a Taipei visit that the company expects its partners to follow the law. “We insist our partners are compliant,” Huang said, adding that he hoped they would tighten their compliance to prevent future breaches. 

Super Micro told reporters the same thing about its own compliance rules, stating that the accused staffers were in violation of its export-control policies if the allegations against them prove to be true.

In the meantime, Huang has still not given up all hope of finding a legal route into China, pitching Nvidia’s licensed H200 chip as an alternative. Beijing has yet to give the green light on that plan, though.

Taiwanese authorities have a more hardline policy about sensitive technology leaving the island. In July, prosecutors charged a former TSMC employee over the alleged theft of chip know-how that Taipei classifies among its national core assets, a case investigators say was aimed at China, Cryptopolitan reported.

The smartest crypto minds already read our newsletter. Want in? Join them.