Taiwanese authorities have busted a smuggling ring that used Japan as a transit point to smuggle Super Micro Computer servers loaded with high-end Nvidia artificial intelligence (AI) chips into China, arresting three suspects and seizing roughly 50 servers worth more than $15 million.
It’s the first time smugglers have been found to be using Japan’s route. In March, a US police operation exposed a special transport network running through Taiwan, Thailand and Hong Kong, in which a co-founder of Super Micro Computer was arrested.
Central Taiwan News Agency (CNA) reported On May 21, the Keelung District Prosecutor’s Office was investigating three suspects, identified by the surnames You, Wang and Chen, for using forged export documents to ship Super Micro AI servers loaded with restricted Nvidia chips to Hong Kong and Macau. The trio allegedly knew that the servers were subject to strict US controls and that the devices were banned from being sold in mainland China, Hong Kong and Macau.
Seeking illegal profits, they allegedly conspired to buy dozens of servers in Taiwan, each priced at more than NT$10 million (US$312,000), and ship them from a northern port under falsified cargo descriptions, prosecutors said. During an operation on May 20, Taiwan’s coast guard searched 12 locations, including the defendants’ residences and related companies, and seized 50 servers along with mobile phones, computers, ledgers, luxury cars and NT$9 million in cash.
In the export documents, the defendants listed a country in Northeast Asia as the destination. Bloomberg on Wednesday identified the country of destination as Japan.
Citing people familiar with the matter, Bloomberg reported that at least one shipment had already passed through Japan and reached Hong Kong, with investigators suspecting mainland China as the final destination. A second scheduled shipment was intercepted before it left Taiwan.
Super Micro specializes in building AI servers powered by Nvidia’s most advanced chipsets, including the GB200, B200, H200 and H100. The company’s global brand name is Supermicro.
“At the end of the day, Super Micro has to run their own company. I hope they will improve and improve their compliance with regulations and avoid this from happening in the future,” Nvidia CEO Jensen Huang. said media during his trip to Taipei on May 23, adding that Nvidia strictly explains export rules to all its partners.
“Supermicro is committed to protecting our advanced technologies and intellectual property, and we are proud to have worked closely with Taiwanese authorities in the recent incident, helping to prevent the illegal diversion of our highly sought-after systems to China’s restricted market,” the Nasdaq-listed company said. said in a statement Thursday. “Our cooperation with authorities in Taiwan resulted in the arrest of three suspects and the seizure of 50 servers that were fraudulently purchased after being sold by Supermicro to an authorized reseller.”
Beijing appeared to downplay the arrests. When a foreign reporter asked about the incident, Chinese Foreign Ministry spokesman Guo Jiakun discharged in two sentences during a regular press conference on May 22.
“It’s not about foreign affairs,” he said. “I’m not aware of that.”
“The case was widely seen as Taiwan’s first major enforcement action against semiconductor smuggling, coming as gray market activity had increased in response to tightening US restrictions on high-end chip exports to China,” a Zhejiang-based columnist said. says in an article published on May 24.
“The detention of the three suspects from Taiwan sent a clear signal against potential violations in the semiconductor and AI supply chain, and was putting more compliance pressure on tech giants such as Nvidia and Super Micro.”
After Bloomberg identified Japan as the transit country on the new smuggling route, China-based columnists and media remained completely silent on the story.
Beijing claims victory
The blow comes against a backdrop in which Washington’s approval of Nvidia H200 exports to China has been rescinded by Beijing, which has urged domestic firms to buy from domestic chipmakers such as Huawei Technologies. The result has been zero H200 shipments in China and a rapid erosion of Nvidia’s market share.
In one interview to CNBC on May 20, Huang acknowledged that the company’s share of China’s AI accelerator market has fallen from roughly 95% to zero following successive US export restrictions, with Huawei emerging as the main beneficiary and its Ascend chip line on track to generate $12 billion in revenue by 2022.
“The demand in China is quite large,” he said. “Huawei is very, very strong. They had a record year, they’ll probably have a record year coming up, and their local ecosystem of chip companies is doing pretty well because we’ve evacuated that market. We’ve really given them that market.”
Huang said he had told analysts and investors not to expect anything about approvals to sell advanced chips in China, but added that Nvidia remains eager to return if conditions change.
Huang’s last-minute inclusion in US President Donald Trump’s delegation to China from May 13 to 15 had once fueled market expectations that he could secure Beijing’s approval to sell H200 chips in the country.
Beijing not only withheld a green light for H200 imports, but also reportedly prohibited Nvidia’s GeForce RTX 5090D V2, a graphics card designed specifically for the Chinese market to comply with US export regulations.
Some Chinese commentators seized on Huang’s remarks as evidence that China had won the chip war against the United States and that American chip dominance in the Chinese market was over.
“Huang had brought to light a truth that many had pretended not to see.” says a columnist based in Gansu. “The original intent of the US restrictions was to prevent China from obtaining high-end artificial intelligence chips and curb Chinese AI development, but that intent was misguided from the start,” he adds.
“American policymakers believed that China needed American chips to develop AI. But Huang told them: with or without Nvidia, China will move forward on its own,” he continues. “Chinese researchers have turned to their own chips and technology. China’s domestic computing ecosystem has already taken shape and can function without external supply.”
Some observers noted that Beijing’s rhetoric about winning the chip war is concerned with reports that Chinese tech giants still have strong demand for Nvidia’s high-end chips, and that some have sought to obtain them through smuggling or setting up AI data centers overseas.
On March 19, US authorities loaded Yih-Shyan “Wally” Liaw, a co-founder of Super Micro Computer, along with two associates, conspired to divert US-made artificial intelligence servers equipped with limited graphics processing units (GPUs), including A100 chips, to China. Liaw and a co-defendant were arrested in California, while a third remains at large.
Bloomberg reported on May 9 that the Southeast Asian company at the center of that smuggling ring is Bangkok-based OBON Corp, which allegedly helped transfer billions of dollars worth of Super Micro servers containing advanced Nvidia chips to China. The report named Alibaba Group as one of the many end customers.
Alibaba denied any involvement, saying it has no business relationship with Super Micro, OBON or any third-party brokers named in the indictment and that it has never used banned Nvidia chips in its data centers.
Read: Beijing bans Nvidia’s flagship graphics card to prop up domestic rivals
Follow Jeff Pao at X at @jeffpao3
