Super Micro Computer shares have fallen sharply today after U.S. prosecutors charged three people tied to the company in an alleged scheme to divert restricted AI server technology to China.
At press time, the SCMI stock had dropped by about 28% to trade at a 52-week low of $22.03 after the indictment was unsealed. This decline is one of the company’s steepest single-day declines in recent years, especially after reporting Q2 2026 earnings that surpassed expectations, with revenue reaching $12.7 billion. However, gross margins had fallen significantly to 6.4% from 9.5%.
The Justice Department charged co-founder Yih-Shyan “Wally” Liaw, sales manager Ruei-Tsang “Steven” Chang, and contractor Ting-Wei “Willy” Sun. Prosecutors said they helped smuggle at least $2.5 billion of U.S. AI technology to China in violation of export control laws. According to the filing, the servers were assembled in the United States, routed through Taiwan and Southeast Asia, and then sent onward to China.
Super Micro said the company itself was not named as a defendant. It also said it had placed Liaw and Chang on leave, ended its relationship with Sun, and cooperated with investigators. NVIDIA, whose chips are widely used in AI servers, said strict compliance with export laws remains a priority and added that diverted systems do not receive its support or service.
Charges focus on alleged export-control evasion
According to the indictment, the accused allegedly used deceptive methods to conceal shipments from both manufacturers and U.S. authorities. The prosecutors alleged that labels and serial numbers were removed from real servers and transferred to dummy machines, with workers using hair dryers to strip off identifying markers. The government said these steps were part of an effort to make compliance inspections appear legitimate while actual servers had already been moved.
Concurrently, the government believes at least $510 million in servers were diverted to China between April and mid-May 2025, while the broader order pipeline tied to the alleged scheme reached $2.5 billion. Liaw, a U.S. citizen, and Sun, a Taiwan citizen, were arrested, while Chang remains a fugitive, according to Reuters and AP.
Although Super Micro was not charged, investors reacted as though the case could still create reputational and commercial risk. As witnessed, the company’s market value was on track to lose billions after the news, especially with the over 26% dip.
SMCI Drop Revives Earlier Governance Concerns
The market reaction was amplified by Super Micro’s recent history. The company had already faced scrutiny tied to accounting issues and short-seller allegations in earlier years.
That background appears to have made investors more sensitive to any fresh controversy involving governance or compliance.
Concurrently, Liaw’s role added to the concern because he was not only a co-founder but also a board member and executive tied to business development. Moreover, according to the Wall Street Journal summary, the case was described as part of a longer pattern of scrutiny around leadership and related-party concerns at the company.
Source: https://coinpaper.com/15598/smci-stock-crashes-over-25-as-co-founder-gets-charged-in-2-5-b-nvidia-chip-case
