Super Micro Computer (SMCI) shares tumbled more than 11% on Thursday following reports that the U.S. Department of Justice is investigating whether entities linked to Alice Huang were involved in efforts to divert the server maker's products to China. The decline erased a portion of the previous session's gains, when the stock had surged 11% on news of new AMD-powered server shipments and stronger results from a major customer.
DOJ Investigation Details
A report from Semafor, citing two administration officials, indicated that multiple DOJ investigations could involve Nvidia, with one inquiry focusing on potential antitrust violations and two others involving Super Micro and Megaspeed International. The report noted there was no indication that prosecutors would seek criminal charges against Nvidia or its former CEO Jensen Huang at this stage.
Bloomberg separately reported that the DOJ is investigating whether entities linked to Alice Huang were involved in efforts to smuggle Super Micro products into China. The inquiry is being led by the U.S. Attorney's Office in Manhattan, according to a person familiar with the matter.
It remains unclear whether the investigation is connected to existing chip-smuggling cases in the U.S. or Asia, or what role Alice Huang or entities linked to her may have played. Prosecutors are also investigating Megaspeed, Alice Huang's former company, over suspected semiconductor smuggling. The company has denied wrongdoing.
A separate espionage investigation is examining her relationship with Jensen Huang, who resigned as Nvidia's CEO on Thursday following reports of two extramarital relationships, including one involving Alice Huang, whom U.S. authorities reportedly suspect of having links to Chinese intelligence. Nvidia has appointed CFO Colette Kress as interim CEO while searching for a permanent successor.
Bloomberg reported that Alice Huang is currently living in Beijing with the knowledge of security officials. She was connected to Jensen Huang through Megaspeed, described as Nvidia's largest chip buyer in Southeast Asia. Her potential involvement in the alleged diversion of Super Micro products, or that of entities linked to her, remains unclear. The investigations may also conclude without criminal charges.
Previous Scrutiny
The company has previously faced scrutiny over alleged diversion of its products to China. In March, federal prosecutors charged Super Micro co-founder Yih Shyan "Wally" Liaw and two others over an alleged conspiracy to divert Nvidia-powered servers to Chinese customers through a Southeast Asian company. Liaw pleaded not guilty and is no longer with Super Micro, which was not named as a defendant. In August, the company said an independent investigation found no evidence that its current senior management knew about the alleged diversion scheme.
Recent Rally Reversed
The latest decline reversed some of Wednesday's gains, when Super Micro shares climbed 11% after the company began shipping its new H15 generation servers powered by AMD's sixth-generation EPYC 9006 processors. The systems are designed for cloud computing, high-performance computing, AI inference and agentic AI applications. They can also be paired with AMD's Instinct accelerators for demanding artificial intelligence workloads.
The rally was also supported by improving sentiment around CoreWeave, one of Super Micro's largest customers, following the cloud computing company's better-than-expected quarterly results and improved financial outlook. Susquehanna analyst Mehdi Hosseini told Barron's that CoreWeave was among Super Micro's largest customers, if not its largest, and that the cloud provider's earnings beat and stronger guidance helped lift Super Micro shares.
However, the latest DOJ reports have introduced another source of uncertainty for the server maker, potentially overshadowing its recent product and customer-related gains.
This article is for informational purposes only and does not constitute financial advice.
