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On the 20th of March 2026, financial media reported startling new developments at Super Micro Computer (ticker: SMCI) – an AI server company with close ties to Nvidia (ticker: NVDA). On the 17th, prosecutors posted a sealed indictment at the U.S. District Court at the Southern District of New York against three SMCI employees: co-founder Yih-shyan “Wally” Liaw (who owned 21.4 million shares or approximately 2.6% of the company), Taiwan-based sales manager Ruei-Tsan “Steven” Chang as well as Ting-Wei “Willy” Sun, a contractor and alleged fixer. The indictment was made on charges of technology export control violations by enabling the illegal shipment of SMCI-manufactured artificial intelligence (AI) servers containing Nvidia chips to China in a massive, multi-year scheme.
The value was estimated to be at $2.5 billion – nearly 10% of SMCI’s reported revenue for Fiscal Year (FY) 2025 – and was enacted via sales of the servers to an unspecified company in an unspecified Southeast Asian country to whom the accused allegedly used their high-level authority to pressure Supermicro’s compliance staff into approving. The accused then employed hair dryers to carefully peel serial number stickers off genuine Nvidia-powered servers and place them on fake “dummy” servers to pass physical audits by inspectors. The “real” servers were then shipped from this unspecified country to China.
From the 19th through early trading on the 23rd, the stock price of SMCI declined over 35% while Nvidia declined by around 5%.
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Source: TradingView
While trading volumes in both post-session trading on the 20th as well as the pre-session trading on the 23rd exploded – principally shot up relative to more recent sessions in the week ending on the 20th, SMCI’s stock price improved somewhat to be a net 20% below the price as of the 19th. Since then, the stock has shown some improvement: as of the 25th, the stock price is a little under 22% below the price on the 19th.
While this might be interpreted as market consensus that SMCI has washed its hands off the whole affair and that further adverse actions by the U.S. government wouldn’t be forthcoming, this is likely not the case: both SMCI and Nvidia could face additional actions, including but not limited to prosecution.
Did Nvidia Not Know?Under Export Administration Regulations (EAR) and the “Know Your Customer” (KYC) guidelines, the likelihood that Nvidia remained completely unaware is a subject of intense legal and political scrutiny. In the specialized world of AI datacenters, orders of the magnitude that was smuggled into China usually involve direct coordination with Nvidia for technical support, power requirements, and software licensing (such as Nvidia’s CUDA), making it difficult to hide the “disappearance” of tens of thousands of chips.
Nvidia effectively could argue that they had verified SMCI; effectively SMCI lied to them about the “ultimate consignee” of the order. Nvidia also recently pointed to a separate 2024 case where its due diligence process did work: Hong Kong-based Stanley Yi Zheng along with two U.S. citizens, Matthew Kelly and Tommy Shad English attempted to acquire hundreds of restricted Nvidia A100 and H100 chips (valued at approximately $62 million) for export to China via a network of pass-through shell companies in Thailand. Unlike the “Wally” Liaw case, this attempt was caught at the procurement stage through administrative red flags: compliance teams noted that the scale of the order did not align with the known infrastructure or business history of the newly formed Thai entities. The group attempted a second “workaround” order in April 2024 using modified documentation. This second attempt was also successfully identified and blocked.
Details of this case were made public on the 25th of March 2026, after the U.S. Department of Justice officially charged1 Zheng, Kelly and English for conspiring to smuggle Artificial Intelligence technology to China – six days after Liaw, Chang and Sun were2.
On the 17th of March 2026, Nvidia CEO Jensen Huang stated3 during the GTC Conference that it has received purchase orders from China and that they’re in the process of restarting their manufacturing to service the Chinese market. This was achieved with intense lobbying by Huang leading to the Trump administration issuing some licenses for China – a decision that led4 to the introduction of the Secure and Feasible Exports Chips Act in December 2025 by a bipartisan panel of legislators who stood in opposition to the decision.
CEO Huang’s statement during the GTC Conference also received a sharp reaction from U.S. legislators: in a letter5 to commerce secretary Howard Lutnick, Republican Senator Jim Banks and Democrat Senator Elizabeth Warren urged “immediate action”, including the immediate pausing, suspension, or other reconsideration of all active export licenses covering advanced Nvidia AI chips and server systems destined for China as well as for intermediaries in south-east Asia, including Malaysia, Thailand, Vietnam and Singapore. They added that Huang has misled U.S. officials in the past by claiming that Nvidia’s customers understood that “diversion” of technology was not legally permitted and monitor themselves very carefully.
What This Boils Down ToIt is no secret that Nvidia – and by extension SMCI – strongly want to access the Chinese market, which is steadily being walled off as a result of a years-long bipartisan drive within the U.S. legislature. While both Nvidia and SMCI state that that they are legally compliant as U.S. companies, it is entirely within the realm of likelihood that elements within these companies are still seeking to unlock sales growth via expedient means such as rerouting exports.
The timing of Nvidia CEO Jensen Huang couldn’t have come at a worse time; the company was doubtless aware that both incidents (and sets of accused) were due to be processed for prosecution while statements were being made about sales to China. This is very likely to raise even more attention and lead to closer scrutiny of the business – regardless of attempts at lobbying within the Trump administration. It is also quite likely that additional departures and arrests could be made; the only question is how high up will these arrests go.
Professional investors in Europe might consider the +3x Long NVIDIA ETP (NVD3) and the -3x Short NVIDIA ETP (NV3S) during bullish and bearish trends in NVDA’s price. Also available for consideration is the 2x Super Micro Computer ETP (SMCI).
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