AI server maker Super Micro Computer’s (SMCI) shares fell roughly 6% on Friday afternoon. This came as shares in U.S. chipmakers also fell, with investors disappointed that President Donald Trump’s two-day visit to Chinese counterpart Xi Jinping yielded no major deal on semiconductors.
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200% short exposure to NVDA with NVDSAccording to Jamieson Greer, the U.S. trade representative, talks on U.S. export controls on semiconductor chips were not a major topic on the agenda at the Trump-Xi summit. The drop in SMCI comes as the company, in recent weeks, has been embroiled in a scandal related to the alleged smuggling of restricted Nvidia (NVDA) chips — through its AI servers — to China by two of its employees and a contractor.
Super Micro Co-Founder in $2.5B Smuggling Scandal
One of the employees is Yih-Shyan “Wally” Liaw, a Super Micro Computer co-founder, senior vice president of business development, and board member. The other is Ruei-Tsan “Steven” Chang, its sales manager in Taiwan.
According to U.S. authorities, the three allegedly conspired to ship the servers through Thailand-based OBON Corp., thereby bypassing export controls and generating over $2.5 billion in sales during the process.
Scandal Raises ‘Serious Credibility Issues,’ Bernstein Says
For context, Super Micro Computer develops, manufactures, and sells high-performance servers and storage solutions. Its product lineup includes workstations, full racks, networking devices, and security software.
SMCI’s shares are up only about 6% year-to-date, with its market performance impacted by the controversy. Bernstein’s analyst Mark Newman recently contended that the scandal raised “serious credibility issues” about Super Micro Computer’s internal operations.
Is Super Micro a Good Stock to Buy?
On Wall Street, Super Micro Computer’s shares remain a Hold based on analysts’ consensus rating. This is based on three Buys, nine Holds, and two Sells assigned by 14 analysts over the past three months.
However, the average SMCI price target of $34.82 suggests roughly 12% upside in the months ahead.
