Super Micro Begins Independent Probe Following Charges Against Co-Founder and Others
Super Micro Launches Investigation into Export-Control Violations
April 7 - Super Micro, a San Jose, California-based company, has announced that it has begun an independent investigation into the indictment of three individuals linked to the company on charges of committing export-control violations.
The U.S. Justice Department last month charged co-founder Yih-Shyan Liaw, sales manager Ruei-Tsang Chang, and contractor Ting-Wei Sun with allegedly running a scheme to route U.S.-made servers through Taiwan to Southeast Asia. The products were allegedly repackaged into unmarked boxes in Southeast Asia and smuggled into China. Super Micro has stated that it has launched an internal review of its global trade compliance program in light of the allegations.
According to the indictment, the three individuals allegedly moved at least $2.5 billion in U.S. AI technology, including over $500 million worth shipped between April and mid-May last year. Super Micro had placed Liaw and Chang on leave and terminated Sun after it became aware of the charges. Liaw resigned from the company's board in March following the indictment.
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Notably, four Chinese universities, including two linked to the People's Liberation Army, purchased Super Micro servers with restricted AI chips over the past year, according to procurement data. This is not the first instance of Chinese universities and research institutes acquiring restricted chips in servers made by Super Micro and other manufacturers.
| Manufacturer | Restricted Chips Acquired (Value) |
|---|---|
| Super Micro | Over $500 million |
| Other Manufacturers | Unknown |
The investigation into Super Micro is being led by two independent board members, Lead Independent Director Scott Angel and Audit Committee Chair Tally Liu. The findings will be reported to the board's remaining independent directors, who have retained law firm Munger, Tolles & Olson to lead the investigation. Consulting firm AlixPartners has been engaged to provide forensic accounting expertise. The independent directors have not set a timetable for completing the investigation.
Investor Takeaway
Investors should be cautious about the potential risks and consequences of export-control violations on companies in the IT sector.
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