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Super Micro Computer Inc (NASDAQ: SMCI) saw its stock drop as much as 14.6% in after-hours trading Thursday following a major legal development tied to illegal exports of artificial intelligence technology to China. The sharp decline came after the U.S. Department of Justice announced charges against three individuals — including company co-founder Yih-Shyan Liaw — for allegedly conspiring to smuggle restricted high-performance AI servers to China in violation of federal export control laws.
Liaw was taken into custody on Thursday, according to DOJ officials. Prosecutors allege the scheme involved falsified documentation, staged dummy servers intended to deceive inspectors, and complex transshipment routes designed to hide the true destination of the restricted technology. John A. Eisenberg, Assistant Attorney General for National Security, emphasized that the alleged operation was a deliberate effort to circumvent U.S. export regulations governing advanced AI hardware.
The DOJ estimates the smuggling operation generated at least $2.5 billion in sales for Super Micro between 2024 and 2025. The three individuals charged include two Super Micro employees and one contractor. The company confirmed it has placed the two employees on administrative leave and terminated the contractor.
Super Micro, a leading manufacturer of AI server infrastructure, integrates NVIDIA (NASDAQ: NVDA) graphics processing units into its products. Because of this, its servers fall under strict U.S. Commerce Department export restrictions, and the company is not authorized to ship NVIDIA-powered servers to China.
Despite the severity of the allegations, Super Micro stressed that it was not named as a defendant in the indictment and stated it is fully cooperating with federal authorities. Investors and market analysts will be closely watching how this legal situation unfolds, as it carries potential implications for the company's regulatory standing and its broader role in the global AI supply chain.
