Taiwan ‘indicts Nvidia employee and eight others’ over alleged China chip smuggling

Taiwan prosecutors have issued indictments against nine people in connection with alleged smuggling of Nvidia chips to China, according to Reuters.

Prosecutors said the indictments apply to employees at Nvidia and Super Micro Computer, with eight charged with forgery and breach of trust to facilitate the transfer of servers containing advanced Nvidia chips to China. An additional defendant was alleged to have siphoned funds from an affected company.

Reports from local media China Times stated that two of the defendants had established a company called Flying Tiger to falsely secure access to Nvidia’s sales network.

The individuals are then alleged to have collaborated with the other defendants to place an order with Super Micro for 130 AI servers containing Nvidia’s high-end B300 chips.

The Wall Street Journal separately reported that the indictments accuse a Super Micro employee of leaking its internal vetting process and seeking the help of an Nvidia employee to secure servers.

The paper added that the Nvidia employee allegedly provided cover for the scheme by telling their managers that the order had been cleared in line with Nvidia’s site inspections.

Both Nvidia and Super Micro stated that they are working with Taiwanese authorities.

In a statement reported by Reuters, prosecutors from the northern city of Keelung said 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”.

The US government and Nvidia have repeatedly attempted to prevent Nvidia chips from being moved into China citing national security concerns over how the hardware could benefit Chinese AI and military advancements.

In July, Nvidia halved its list of approved Asian customers over China smuggling fears and US diplomatic partners such as Singapore have pursued charges against alleged chip smugglers.

Nvidia’s less powerful H200 chips are approved for export to China but have been held up in customs by Beijing to protect demand for its domestic chips. Last week, the Financial Times reported that the Chinese government is gradually softening this approach and allowing domestic tech giants ByteDance and Tencent to import several thousand of the chips.