Super Micro Computer (SMCI) Stock Plummets as Co-Founder Faces Chip Smuggling Charges

Key Takeaways Federal prosecutors indicted three individuals connected to Super Micro, including co-founder Wally Liaw, for allegedly illegally exporting Nvidia chips to China SMCI shares plummeted approximately 33% on Friday when the news broke, extending year-to-date losses to 26% Nvidia has remained silent on whether it will maintain its chip supply relationship with Super Micro Citi analysts downgraded SMCI’s price target from $39 to $25, highlighting heightened “reputation risk” Industry observers believe Super Micro’s survival depends entirely on Nvidia’s willingness to continue chip allocations Federal authorities arrested Super Micro’s co-founder last week in connection with an alleged scheme to illegally export Nvidia chips to China. The criminal indictment names three individuals—including a current employee and an outside contractor—but stops short of charging Super Micro Computer as a corporate entity. Super Micro Computer, Inc., SMCI Yih-Shyan “Wally” Liaw, currently serving on the company’s board of directors, allegedly participated in a conspiracy to illegally divert Nvidia’s advanced B200 processors. Following the announcement, SMCI stock experienced a catastrophic single-day decline of approximately 33% on Friday. Shares saw a modest rebound on Monday amid broader market optimism tied to international trade developments. Nevertheless, SMCI remains in negative territory for 2026, down 26% year-to-date—a striking reversal for a company that had previously benefited from explosive AI infrastructure demand. Liaw’s complex relationship with the organization adds another troubling dimension. He stepped down from his position in 2018 following an internal audit that uncovered accounting irregularities requiring financial restatements. Super Micro controversially rehired him in 2022 before appointing him to the board in 2023. That rehabilitation now appears dangerously misguided given the federal charges. This scandal represents the latest in a series of...