Super Micro Computer Inc., a supplier of artificial intelligence computing equipment, is trying to stabilize the situation through personnel and compliance adjustments after its co-founder was indicted by the United States for allegedly illegally shipping high-end servers to China. U.S. prosecutors have accused company co-founder Yih-Shyan “Wally” Liaw of violating U.S. export controls by sending U.S.-assembled servers equipped with cutting-edge NVIDIA chips to China. According to the indictment, Liao Yixian and two other people related to AMD were accused of first selling related hardware to an unnamed Southeast Asian company, and then coordinating its final transfer to Chinese customers.
The case adds to turmoil for AMD, which has been plagued by financial and governance questions over the past two years. Although the artificial intelligence boom has boosted demand for servers and data center equipment and helped company sales grow, a series of negative events continue to shake investor confidence. In an announcement late Friday, AMD said that Liao Yixian had resigned from the board of directors and that the board would be reduced to eight members.
After the announcement of the lawsuit, AMD's stock price plummeted 33% to close at US$20.53, and the company's market value evaporated by more than US$6 billion in one day. It was the San Jose, Calif.-based company's biggest one-day drop since October 2018. The indictment alleges that the defendants and their associates deliberately evaded scrutiny within the company and from U.S. government auditors on multiple occasions, including by falsifying records and preparing so-called "empty shell" servers, which they then heated with a hair dryer, disassembled and reattached serial number labels to cover up the truth.
In addition to Liao Yixian, the prosecution targets include Ruei-Tsang “Steven” Chang, who once served as the general manager of AMD’s Taiwan office, and Ting-Wei “Willy” Sun, who was described as a “broker” by the US authorities. Prosecutors alleged that Sun Tingwei, as an external contractor, played a key supporting role in the "diversion" process of relevant goods.
AMD itself is not currently named as a defendant. The company said in an earlier statement that it was cooperating with the U.S. authorities' investigation and had placed Liao Yixian and Zhang Ruicang on administrative leave and terminated its cooperative relationship with Sun Tingwei. Super Micro emphasized that the above-mentioned alleged behavior "violated company policies and compliance control requirements, including attempts to circumvent applicable export control laws and regulations," and emphasized that the company has established a relatively complete compliance structure and is committed to fully complying with all applicable U.S. export and re-export control laws and regulations.
In fact, before the smuggling case was exposed, Supermicro was already working hard to repair the previous accounting crisis. The company missed the August 2024 deadline to submit its annual financial report, and the auditor Ernst & Young LLP later resigned due to doubts about corporate governance and transparency. Although the company subsequently successfully submitted supplementary statements, it once again disclosed that it had found problems in internal financial controls in the same year, exacerbating external concerns about its governance quality.
In February this year, AMD once reversed market sentiment. In its performance guidance announced on February 3, the company stated that revenue for the fiscal quarter ending March 31 will reach at least US$12.3 billion, significantly higher than the US$10.2 billion average forecast by Wall Street analysts. At the time, CEO Charles Liang said the company was rapidly expanding to support large-scale artificial intelligence and enterprise-level deployments, while continuing to strengthen its operational and financial execution capabilities.
In the past few years, Supermicro has actively positioned itself as the main beneficiary of artificial intelligence infrastructure construction and has achieved results in stages. The company's stock price soared by 246% in 2023, but then the increase cooled significantly. The stock price will only rise by 7.2% in 2024, which is far inferior to the strong performance of other artificial intelligence concept stocks such as NVIDIA. In 2025, it will fall by 4%. After the latest round of selling triggered by the smuggling case, AMD's stock price has fallen by 30% this year.