Taiwan seeks to detain three in Nvidia chip smuggling crackdown
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The US has restricted sales of AI chips made by companies such as Nvidia to China since 2022.
PHOTO: EPA
TAIPEI - Taiwanese officials are seeking to detain three individuals for forging documents in order to export Nvidia AI chips to China, the island democracy’s first such crackdown on semiconductor smuggling.
The trio is accused of making fraudulent declarations about AI servers manufactured by US-headquartered Super Micro Computer, so that they could ship them to China, Hong Kong and Macau in violation of US trade rules.
Super Micro assembles AI chips from the likes of Nvidia into systems that are installed in data centres and used to train and run models like OpenAI’s ChatGPT. Washington has restricted sales of the hardware to China since 2022.
The volume in question is relatively small – somewhere in the neighbourhood of 50 servers, according to a spokesperson for the Taiwan Keelung District Prosecutors Office, which apprehended the three defendants on May 20. But the action is still significant for the Taiwan government, which has long been under US pressure to take a stronger stance against export control violations that occur on the island.
The defendants “fully knew” that sales of the servers to China are “strictly regulated” by the US, the Taiwan prosecutors office said in a press release on May 21. But in an effort to secure “exorbitant profits”, they allegedly “conspired to purchase the servers in Taiwan and export them using fraudulent documentation. They are consequently suspected of offences including forgery of documents under the Criminal Code.”
Super Micro’s servers are also the subject of the biggest chip smuggling prosecution in the US, where the authorities arrested the firm’s co-founder – who has pled not guilty – for allegedly diverting billions of dollars worth of Nvidia chips to China.
That case reverberated from Silicon Valley to South-east Asia, a sign that Washington is getting serious about addressing a chip smuggling problem that Nvidia boss Jensen Huang once denied exists.
The Taiwan case was initiated independently and is not directly linked to the US indictment, according to the prosecutors office spokesperson. However, whether the two cases are connected in any way will require further investigation to determine, the spokesperson added.
In the US case, prosecutors alleged that the smuggled Super Micro hardware was shipped from the US to Taiwan to an unnamed South-east Asian country – which Bloomberg has reported is Thailand – before ultimately going to China.
Taiwan authorities did not specify whether the Super Micro servers for which the defendants allegedly prepared false documents ever actually made it to China, and if so, what path they took to get there.
Nvidia and Super Micro did not immediately respond to requests for comment outside of normal business hours. The two companies have both previously emphasised their commitment to abiding by US export controls and all other applicable laws.
To be sure, the challenge is industrywide. Hardware made by companies including Dell Technologies and Hewlett Packard Enterprise has also appeared in alleged illicit chip trade rings detailed by prosecutors in the US and Singapore.
At no point have the authorities publicly accused Nvidia or the various server makers of wrongdoing across the cases, of which there are now at least seven, including the Taiwan one.
The action on May 20 marks a shift for Taipei, which for years stood on the sidelines of AI chip export debates as Washington pursued ever-stricter policies. Under President Lai Ching-te, Taiwan has been increasingly assertive in protecting its technological edge, including by prosecuting trade secret leakage and imposing unprecedented export restrictions on two major Chinese chip champions.
Mr Lai also promised in 2025 to address unspecified US concerns regarding export controls, which have been Washington’s primary tool for constraining China’s AI ambitions.
The move does not mean that Taiwan, which is home to the vast majority of AI chip manufacturing, is matching US curbs on processors from Nvidia and Advanced Micro Devices. Those American rules require companies to seek Washington’s permission for virtually all AI chip exports to China, and Taipei – like other Asian capitals – has long been reluctant to take such an aggressive step.
Rather, the development indicates Taiwan’s interest in using local laws, specifically around fraud, to get at the same issue. That is similar to the approach Singapore took in 2025 when arresting three men for misleading server suppliers about the ultimate destination of hardware first sent to Malaysia.
The Taiwan prosecutors identified the three defendants only by their surnames. As such, Bloomberg was unable to reach them for comment. The trio and other witnesses were apprehended and interviewed on May 20, according to the statement from the prosecutors office, which also executed search warrants at 12 locations. BLOOMBERG
