$SMCI

Super Micro crashes after Chinese smuggling allegations; analyst calls it a 'train wreck'
Super Micro Computer (SMCI) shares crashed more than 28% on Friday after three individuals linked to the company, including a co-founder, were charged with assisting in the smuggling of at least $2.5B worth of AI technology to China.
Seeking Alpha analyst Jeremy of Kumquat Research called the AI server maker a “train wreck.”
“Super Micro's governance issues have been a train wreck in slow motion,” Jeremy said in an email. “Compliance and governance issues have plagued the company for years, whether it's delayed regulatory filings or the departure of EY due to supposed accounting irregularities. The current indictment could be the nail in the coffin, as Nvidia and other chipmakers will likely have to divert shipments from Super Micro due to this issue and due to the company's increasingly risky balance sheet position.”
Conversely, shares of Dell Technologies (DELL), which competes with Super Micro in the AI server market, rose on Friday, bucking a broader market sell-off.
U.S. prosecutors did not name Super ‌Micro in the complaint, referring only to a “U.S. manufacturer.” San Jose, California-based Super Micro said it was informed by federal prosecutors of the indictment on Thursday. It noted that the company itself was not named as a defendant in the case and said it had cooperated with investigators.
In an indictment unsealed on Thursday, the U.S. government alleged that Yih-Shyan “Wally” Liaw, Ruei-Tsan, “Steven” Chang, and Ting-Wei “Willy” Sun worked together to violate the Export Control Reform Act. Liaw co-founded Super ​Micro in 1993, and joined its board of directors in 2023. Chang was a sales manager in the Taiwan office of Super Micro, while Sun was ⁠a contractor.
U.S. officials allege the trio went to great lengths to hide their actions from both U.S.-based server manufacturers and export control authorities. They allegedly even used hair dryers to remove labels and serial numbers ​from the real machines and placed them on dummy machines left behind after the real machines had been shipped to China.
The efforts had yielded around $2.5B in sales for the server maker since 2024, with $510M sold between late April 2025 and mid-May 2025 going to the Southeast Asian company and on to China, the indictment said. The plaintiff said the server maker had no U.S. Commerce Department license to export servers featuring Nvidia's (NVDA) GPUs to China.
Super Micro said it placed Liaw and Chang on leave and terminated its ties with Sun, who ​was a contractor, after being made aware of the charges on Thursday.