Supermicro launches probe after staff charged with China export violations

Board-led inquiry follows indictment of two employees and a contractor over alleged diversion of Nvidia GPU servers

Supermicro has launched an independent investigation after three people associated with the company were charged with violating US export restrictions on China.

The server maker confirmed the probe is underway regarding the indictment last month of two employees – one a co-founder of the company – and a contractor for diverting AI servers with Nvidia GPUs to Chinese customers.

Supermicro itself is not accused of playing any part in the incident, and says it is cooperating fully with the criminal investigation. The company said it was informed of the alleged wrongdoing on March 19 after two of the defendants were arrested.

The internal inquiry is being led by two independent board members, Scott Angel, lead independent director, and Tally Liu, chair of the board's audit committee.

According to Supermicro, Angel spent nearly four decades in Deloitte's audit and assurance practice, while Liu racked up 25 years' experience as a certified public accountant.

The pair have also retained outside firms to assist, including lawyer Munger, Tolles & Olson, consultancy AlixPartners, and Supermicro's auditor, BDO USA.

At the same time, a separate internal review of Supermicro's Global Trade Compliance Program is being carried out as the alleged illicit activity by the defendants was not detected by the company.

No timetable has been set for the investigation, and Supermicro said it will provide an update only when it is complete.

Meanwhile, Bain Capital's server farm subsidiary, Bridge Data Centres, has reportedly cut ties with an Asian partner following a US government probe into whether Nvidia products were smuggled to China in violation of export restrictions, according to Bloomberg.

However, the company in question, Megaspeed, posted a rebuttal on its website, saying US authorities found no evidence of violations involving the illicit transfer of chips or other illegal activity, and that it operates fully within the bounds of all applicable export control regulations. Megaspeed said it may pursue legal action against Bloomberg over what it calls the "misleading nature of the article."

Back in Washington, a bipartisan group of lawmakers wants to impose further restrictions on exports of chipmaking equipment to curb China's ability to produce its own advanced AI silicon.

The Multilateral Alignment of Technology Controls on Hardware (MATCH) Act aims to "strengthen US national security by closing critical gaps in export controls on semiconductor manufacturing equipment (SME)."

Among its provisions are bans on sales of SME to destinations in any "country of concern," including Deep Ultraviolet (DUV) immersion lithography systems and cryogenic etch tools used for advanced and legacy chips.

The move could be further bad news for Dutch tech giant ASML, which has already faced years of US-imposed restrictions on the chipmaking kit it can sell to China, one of its biggest markets. However, ASML stated last year that it expected Chinese demand for its products to decline as Beijing doubles down on home-grown alternatives in response to ongoing export restrictions. ®