Super Micro stock falls even after letter addresses Taiwan probe concerns

Super Micro Computer Inc. SMCI sought to reassure customers and partners after four employees at its Taiwan unit were questioned as part of an investigation into the alleged illegal export of advanced AI servers containing Nvidia chips.

The AI server maker issued an open letter on Wednesday stating that it is not a target of the Taiwanese investigation and has been cooperating with authorities for several months.

Shares rose 5% in trading on Thursday to reach an intraday high of $29.22 following the report.

However, the stock reversed those gains and was trading down 0.11% at the time of writing.

The gain came after a sharp selloff that saw the stock fall 6% on Wednesday and decline 22% over the past seven trading sessions, with losses recorded in six of the last seven trading days.

Company says operations remain unaffected

According to Super Micro, four employees were questioned on June 29 in connection with a Taiwanese investigation regarding the company's sale of products to a technology company in Taiwan.

The company said two employees were detained pending a hearing, while the other two were released on bail. All four have been placed on administrative leave during the investigation.

Super Micro added that investigators were given access to the employees' desks and electronic devices as part of the inquiry.

Chief Revenue Officer Matthew Thauberger addressed customers and business partners directly in the company's open letter.

"We do not have full visibility of the investigation as it is ongoing. Most importantly, I want to assure you this has absolutely no impact on our ability to serve and support you," he wrote.

Thauberger also emphasized the company's commitment to export compliance.

"Supermicro remains committed to protect US interests and to safeguarding our advanced technologies and intellectual property for the benefit of our customers, our partners, our company and our industry," Thauberger added.

Investigation centers on Nvidia-powered AI servers

The investigation involves Super Micro servers equipped with Nvidia chips, which are subject to US export controls restricting shipments to China.

Taiwanese prosecutors began the first phase of the investigation in May, detaining three individuals suspected of illegally exporting the company's high-end AI servers powered by Nvidia chips. Those three individuals remain in custody.

Super Micro said in an earlier statement that Taiwanese authorities arrested three people and seized 50 servers in May as part of a collaboration with the company to "prevent illicit diversion of server technology."

The company has maintained that it is cooperating with investigators and is not the subject of the probe.

Export control scrutiny continues

The latest developments follow legal action taken earlier this year by US authorities.

In March, the US government charged Super Micro co-founder Yih-Shyan "Wally" Liaw and two other individuals over an alleged scheme to divert US-assembled servers to China in violation of US export-control laws.

Following the charges, Liaw resigned from the company.

Although Super Micro has distanced itself from the allegations involving its former co-founder, the issue weighed on investor sentiment, raising concerns that some customers could delay or cancel orders.

The company said it has taken steps to cooperate with investigators while continuing normal business operations.