Taiwan prosecutors charge nine in alleged AI server smuggling scheme

TAIPEI — Taiwanese prosecutors have charged nine people, including an Nvidia employee and two former Super Micro employees, with illegally exporting high-end AI servers to China, according to the Keelung District Prosecutors' office. The charges, announced Monday, mark another flashpoint in the escalating US-China AI rivalry, with advanced semiconductors and the servers that house them at the center of the competition.

The servers in question are equipped with Nvidia's B300 graphics processing units, which are have been banned from sale to China under export controls tightened by Washington since 2022, according to the prosecutor's office. These controls were further extended in April 2025, when the US required licenses for exports of Nvidia's H20 chips to China, though some sales were later allowed to resume. The prosecutors' document notes that any sale of high-end AI servers by Nvidia requires a strict review process, and purchases of more than eight servers trigger mandatory on-site checks by company staff at the client's premises.

Investigators said the defendants, whose names were not released, "colluded with one another at various levels for enormous profit," as stated in the indictment. The document also said the defendants were "fully aware" of the "rigorous internal control procedures" at Nvidia and Super Micro. The charges include breach of trust and document forgery.

Details of the smuggling operation

Prosecutors detailed a scheme that involved falsifying documents to make it appear that 130 B300 servers were installed and in use at a facility in Taiwan. In reality, 74 of those servers were exported and delivered to customers in China, while 56 were intercepted after Taiwanese customs detected irregularities and remain in Taiwan, according to the prosecutor's office.

The route., as described in the indictment., was labyrinthine: 50 of the servers that reached China went through Indonesia, 16 were delivered directly, and 8 were sent first to Japan and then to Hong Kong before reaching the mainland. Investigators also found that some defendants set up a company in Japan to help transfer servers and created fake websites to evade export controls.

One suspect linked to a related case remains at large, accused of siphoning funds from a distributor involved in helping China gain access to restricted Nvidia chips. In a related development, Supermicro's co-founder Wally Liaw was arrested in March for allegedly funneling $2.5 billion in restricted AI servers to China, which prompted the Taiwanese probe.

Company statements and broader context

Nvidia spokesperson Patrick Rutherford said in a written statement: “We will work with the Taiwan authorities to help them resolve the allegations as quickly as possible.”

Super Micro said in a statement that the arrests of two of its former employees were due to its cooperation with Taiwanese authorities, and the company will continue to enhance its export compliance program to protect American innovation. According to a statement given to PCMag, Supermicro also confirmed it is not a target of the Taiwanese probe.

Neither company immediately responded to requests for comment in some reports, though the statements above were provided.

Taiwan, which is the world's largest producer of advanced chips used in AI applications, has tightened export controls in recent years to keep advanced technology from reaching China, which claims the democratically governed island as its own territory despite the strong objections of the island's government. The jurisdiction of the case lies with the Keelung District Prosecutors' office.

The case also brings to light the wider scrutiny on AI hardware trade. Reports have also emerged that Nvidia's CEO Jensen Huang in May criticized Supermicro's compliance program, urging the company to improve it. Supermicro subsequently fired several employees connected to the scheme, a third-party probe cleared current senior officials, and investors have sued the company for securities fraud. Additionally, US lawmakers are considering the Remote Access Security Act (RASA), which would extend export controls to remote cloud-based access to critical hardware. Nvidia has also recently increased prices for its AI servers by 15 percent.

As the US continues to allow sales of previous-generation products like H200 chips to China, Taiwan remains strict about exports of newer technology to avoid displeasing US regulators. The case underscores the ongoing crackdown on illegal trade in advanced technology between US partners and China.

Perspectives on the case

Taiwan prosecutors (Keelung District Prosecutors' office): They assert they illegitimately exported high-end servers to China for enormous profit, increasing corporate compliance costs and damaging Taiwan's international image.

Nvidia: Spokesperson Patrick Rutherford expressed commitment to helping Taiwan authorities resolve the allegations quickly.

Super Micro: Cooperates with Taiwanese authorities, stating that its former employees' arrests were due to its active collaboration, and maintains it is not a target of the probe.