Taiwan issues indictments over alleged illegal export of AI servers to China

Taiwan prosecutors said on Monday they had indicted nine people, including employees of Nvidia and Super Micro, over involvement in the illegal export of artificial intelligence ‌servers to China. Semiconductor powerhouse Taiwan is the world's largest producer of advanced chips used in AI applications. Prosecutors this year investigated the suspected illegal export of servers equipped with Nvidia chips subject to U.S. export controls. Washington has imposed curbs since 2022 making it illegal for such semiconductors to be exported or sold in ‌China without a license.

Eight people, including one employee of Nvidia's Taiwan unit and two employees of Super Micro's Taiwan unit, were charged with breach of trust ‌and document forgery in connection with the illegal export of high-end AI servers, prosecutors in the port city of Keelung said in a statement. Nvidia said its employees have "every incentive to work diligently with customers to ensure compliance with all applicable laws," adding it would work with the Taiwan authorities to help them "resolve the allegations as quickly as possible".

Super Micro said its cooperation with Taiwanese ⁠authorities led to ​the arrests of the indicted individuals, ⁠including two former employees of its Taiwan subsidiary. "The Company continues to cooperate with Taiwan authorities, is not a target of their investigation and has not been accused of any wrongdoing," it ⁠said in a statement.

A ninth defendant was charged in a related case involving the alleged siphoning of funds from a distributor company involved, prosecutors said, without providing the full ​names of any of the defendants. SERVER ALLEGATIONS

The alleged scheme involved making it appear that 130 B300 servers ordered from Super Micro would be ⁠installed and used at a rented server facility in Taiwan. Prosecutors said false end-user documents stated that the servers would be installed in Taiwan.

Of those 130 servers, 74 were ultimately exported and delivered to ⁠Chinese ​customers through routes that included direct shipments to China as well as transhipments through Indonesia, Japan and Hong Kong, they said. The remaining 56 servers were intended to be exported to a company in Japan, prosecutors said, but Taiwan customs officials detected irregularities and stopped their export.

'FULLY AWARE' OF CONTROLS The prosecutors ⁠said the defendants were "fully aware" that both Nvidia and Super Micro have "rigorous internal control procedures" regarding exports.

However, the defendants "colluded with one another at various levels for enormous ⁠profit, illegally exporting high-end servers, increasing corporate ⁠compliance costs, and severely damaging our nation's international image", they added. Taiwan has tightened export controls in recent years to keep advanced technology and know-how from reaching China, which claims the democratically governed island as its own territory despite the ‌strong objections of the ‌island's government.