Super Micro shares fall 5.53% after former contractor pleads guilty to smuggling servers to China
Key Facts
Ting-Wei "Willy" Sun, a former contractor associated with Super Micro, pleaded guilty on Thursday in a case involving the diversion of artificial intelligence servers containing Nvidia chips to China, according to Reuters. Citing a court docket, the agency reported that Sun entered his plea in U.S. District Court in Manhattan in the case involving violations of U.S. export controls. The plea covered 4 charges, according to Benzinga, involving conspiracy to violate export controls, smuggling, defrauding the U.S. government and obstruction of justice. Super Micro terminated its relationship with Sun when the charges were announced, according to its statement on the case. In the same statement, the company said it was not a defendant in the indictment and that the alleged conduct violated its policies and compliance controls.
According to the U.S. Department of Justice, the intermediary company purchased approximately $2.5 billion worth of servers from the U.S. manufacturer during 2024 and 2025. In a specific portion of the operations covered by the charges, prosecutors said servers worth at least about $510 million were diverted to China between late April and mid-May 2025. The shipments passed through the manufacturer's facilities in Taiwan before being delivered to the intermediary company elsewhere in Southeast Asia, according to prosecutors' account. False documents identified the intermediary company as the servers' end user, according to the Justice Department. Prosecutors accused the participants of using thousands of nonfunctioning dummy servers, physical replicas of the real equipment, to deceive the compliance team during inspections.
Prosecutors described a method of concealing the equipment's identity that involved using a hair dryer to remove labels and serial-number stickers and reattach them to the dummy equipment. In its response when the case was announced, Super Micro said: "Super Micro is not named as a defendant in the indictment." The company said at the time that it had placed the accused employees on administrative leave and terminated its relationship with the contractor linked to the case. Meanwhile, Yih-Shyan "Wally" Liaw, the company's co-founder, pleaded not guilty to the charges, according to a report by The Next Web. The website added that Liaw had left Super Micro's board, while Sun pleaded guilty in the Manhattan court to charges related to the server diversion scheme.
Super Micro later announced the completion of its internal investigation, led by independent board members, in a statement that also addressed measures to strengthen compliance within the company. It said the investigation found no evidence that any current member of senior management knew of the alleged server diversion scheme. It added that the investigation found no evidence that its previously issued financial statements could no longer be relied upon because of the potential diversion of restricted products. It also announced personnel actions, including dismissals for violations of company policies or its code of conduct. According to the statement announcing the investigation's completion, the full board adopted the recommendations to strengthen the export compliance program, along with the personnel actions the company took following the internal investigation's findings.
In the market, Super Micro shares fell 5.53% to $39.54 during trading on Monday, October 12, 2026, according to Benzinga. That was an intraday reading at the time the report on the former contractor's guilty plea was published, rather than a closing price. The stock's move came in connection with the case involving Super Micro servers equipped with Nvidia artificial intelligence chips, which was the subject of Sun's court plea. Alongside the announcement that its internal investigation had been completed, Super Micro affirmed its continued cooperation with government authorities in the ongoing investigations. Sun is scheduled to be sentenced in September 2027, according to The Next Web, which cited Bloomberg for the sentencing date.