Nvidia senior manager caught up in alleged AI chip smuggling to China — faces up to 5 years in prison

Taiwanese prosecutors have indicted a senior Nvidia manager over his alleged involvement in a scheme to smuggle advanced AI servers to China. This is the first known criminal case in Taiwan involving an Nvidia employee accused of taking part in the black-market trade in AI hardware.

The Nvidia employee, identified by his surname Chang, allegedly worked with eight other people to arrange the shipment of 74 servers equipped with high-end Nvidia B300 AI chips to China through Japan and Indonesia, according to people familiar with the case cited by Bloomberg. Another 56 servers were allegedly prepared for shipment but were seized by Taiwanese authorities.

Taiwan has also indicted two senior employees of Supermicro, which manufactured the servers, along with senior employees of several other companies allegedly involved in arranging customers and shipments. Supermicro said it has been cooperating with Taiwanese authorities and is not a target of the investigation.

According to the indictment, the group allegedly used companies in Japan and Taiwan to disguise the final destination of the hardware and bypass US export restrictions. The alleged scheme involved creating the appearance that Flying Tiger, the supposed end user, had sufficient space at a Taiwanese data center to receive the servers. Prosecutors say Nvidia and Supermicro employees were involved in an inspection of the site. Chang later told Nvidia executives that the inspection had been completed, allowing the order to move forward. Supermicro eventually agreed to sell 130 servers to Flying Tiger, which were delivered in three batches.

The defendants then allegedly arranged for 40 of the servers to be sold to a Chinese customer, with some shipped directly to China and others routed through Indonesia. Another 34 servers were sent through Indonesia and Japan to a second Chinese company.

Taiwanese authorities uncovered the alleged scheme before the remaining 56 servers could be exported to Japan using what prosecutors described as false documents.

Nvidia itself has not been accused of any wrongdoing. After Chang was first detained in July, the company said that “smuggling is a nonstarter” and that it primarily sells its products through well-known partners that help ensure compliance with US export control rules. Supermicro also said it is cooperating with Taiwanese authorities and is not a target of the investigation.

Prosecutors are seeking a five-year sentence for Chang, whom they describe as the central figure in the alleged scheme. The charges involve forgery and breach of trust, although the allegations have yet to be proven in court. The investigation extends beyond Nvidia and Supermicro. Taiwanese authorities have also indicted senior employees of four other companies allegedly involved in reselling the hardware, arranging Chinese customers and organizing shipments.

The case highlights the growing difficulty of enforcing US restrictions on the export of advanced AI chips to China. Despite Washington’s controls, Chinese companies have continued to obtain Nvidia hardware through intermediaries and other black-market channels. US officials have previously alleged that billions of dollars’ worth of Nvidia hardware has made its way to China.