Taiwan's Keelung District Prosecutors Office indicted eight people on August 24 over a scheme that funneled dozens of servers built around Nvidia's most advanced AI chips into China. Among those charged is a partner relationship manager at Nvidia's Taiwan branch surnamed Chang. Prosecutors said 74 of the servers were resold into China, netting more than US$21 million in illegal profit. At the heart of the case is a supply chain built specifically to get around the export restrictions meant to keep that hardware out of the Chinese market.
A Whitelist Built To Keep Advanced Chips Out Of China
At the center of the case are high end AI servers built by Super Micro Computer around Nvidia's B300 GPU, hardware that comes with unusually tight controls attached. Prosecutors said any buyer has to be added to a whitelist maintained by Nvidia before a purchase can even go through, and buyers are barred from reselling the equipment afterward. Orders of eight units or more carry an extra layer of scrutiny, requiring an on-site inspection to verify where the servers will actually be installed and used.
According to the indictment, a company called Flying Tiger Technology set out to profit from resale by taking control of a company in Japan back in February last year and using it as a transshipment point to secure whitelist status for itself. Once Flying Tiger identified a customer interested in buying the restricted servers, the group moved to arrange the export in July of that year.
A Server Room That Could Never Have Handled The Load
Prosecutors say the defendants knew all along that the electrical capacity and bandwidth at the data center run by a company called Chief Telecom (是方電訊) could not possibly support the 130 servers Flying Tiger was trying to buy, yet they concealed that fact anyway. Chang, the Nvidia partner manager at the center of the case, emailed Nvidia executives claiming the required on-site inspection had already been completed and asked them to approve the order. Supermicro ultimately signed off on selling all 130 servers to Flying Tiger on the strength of that assurance.
Seventy Four Servers Reached China Before The Scheme Unraveled
The order was split into three delivery batches. Investigators intercepted the final 56 units in the third batch before they could leave Taiwan, but by then Flying Tiger's actual controller, a man surnamed Chen, had already resold 74 of the servers, generating illegal proceeds prosecutors put at US$21,205,531.
A Side Deal Between Two Supermicro Sales Directors
The case also implicates two senior sales directors at Supermicro's Taiwan subsidiary. During the second delivery batch, one of them, surnamed Wang, indicated to a colleague surnamed Lin that he had figured out the servers in an order Lin was handling were ultimately headed to China. Rather than risk exposure, Lin agreed to let Wang in on a cut of the proceeds to keep him quiet.
Prosecutors Seek Maximum Sentences For The Scheme's Core Figures
Prosecutors wrapped up their investigation on August 24 and charged all eight defendants with breach of trust and forgery. They described Chang as the central figure who cleared the servers for release, deliberately hiding both Flying Tiger's shaky finances and the fact that the money behind the deal traced back to a company in China, while dodging questions about the order's details rather than answering them directly. Citing what they called his poor attitude after the fact, prosecutors recommended the court impose the maximum five year sentence on Chang and three of his co-defendants.
Separately, prosecutors said a man surnamed Ho, the actual controller of a company called Quintai Electronics Co., Ltd. (昆泰公司), along with Albatron Technology's (青雲國際科技股份有限公司) general manager, surnamed Lu, and Lin, are also suspected of embezzling more than US$1.2 million from Albatron's company assets in a related scheme. Because Ho and Lu confessed in full and cooperated with the investigation, prosecutors recommended the court show them leniency in sentencing.
