Taiwanese prosecutors have charged nine people, including former employees of Nvidia (NVDA) and Super Micro Computer (SMCI), with helping smuggle advanced artificial intelligence servers into China. It marks Taiwan's first crackdown targeting the illicit trade in AI chips flowing to mainland China.
The Keelung District Prosecutors Office indicted the nine, including a man surnamed Chang, according to Bloomberg on the 24th. The U.S. maintains export controls to block China from accessing Nvidia's latest chips. Some Chinese firms have sought to obtain the chips through workarounds, and Taiwan, which produces advanced computing components, has come under pressure to devise measures to stop the trade.
According to the indictment, executives of Flying Tiger, named as the end user, set up a Japanese entity in February last year to serve as a transit point for the smuggled hardware. The entity was later added to Nvidia's approved-buyer whitelist. The investigation began in May.
Super Micro's Taiwan unit does not sell servers to companies that have not passed its own and Nvidia's review, which includes on-site inspection, for sales of eight units or more. In September last year, Chang and one indicted Super Micro employee visited data center operator Chief Telecom with other staff and deliberately concealed the fact that Flying Tiger had not leased enough space to house the servers, investigators found. Chang subsequently reported that the inspection had been completed, secured approval for the order, and 130 servers were handed over in three batches.
Prosecutors believe the group circumvented U.S. export restrictions by moving 74 servers equipped with high-performance B300 chips to China via Japan and Indonesia. Another 56 servers that they attempted to ship were seized by Taiwanese authorities.
The Keelung District Prosecutors Office said the group "colluded for illicit profit to illegally export high-performance servers, raising corporate compliance costs and seriously damaging Taiwan's international image." Prosecutors sought a five-year prison term for Chang, identified as the ringleader, on charges of document forgery and breach of trust.
Super Micro said that as the investigation widened, it has been cooperating with authorities in Taiwan and other countries to protect its technology and intellectual property. The company said it is not a target of the investigation and has not been named in any wrongdoing, adding that a recent internal review confirmed its compliance staff acted in good faith. A company spokesperson said it will "continue to address these industry-wide challenges and strengthen our export compliance program to protect American innovation."
Nvidia said it has "every reason to work in good faith with customers to ensure employees comply with all applicable laws and regulations," adding that it will "cooperate with Taiwanese authorities to help resolve the allegations as quickly as possible." Taiwanese authorities did not bring any allegations of wrongdoing against the Nvidia entity itself.
