Nvidia CEO urges Supermicro to strengthen export compliance controls
Nvidia CEO Jensen Huang publicly urged Supermicro to strengthen export compliance controls after Taiwan detained three individuals over false declarations of AI servers. Supermicro responded that an industry-wide solution is needed and emphasized its own compliance framework. The incident follows the indictment of Supermicro's co-founder and others for smuggling chips to China, with attention also on the company's internal control remediation and CFO hiring issues.
Quick Overview
- Nvidia CEO Jensen Huang told reporters on Saturday that its American partner Super Micro Computer needs to strengthen export compliance controls and insisted that partners adhere to U.S. trade rules, according to tech media outlet Tom's Hardware.
- Regarding Taiwan's detention last week of three individuals suspected of making false declarations about AI servers manufactured by Super Micro, Huang expressed hope that Super Micro would "strengthen and improve its compliance oversight to prevent such incidents in the future," according to Bloomberg.
- A Super Micro spokesperson declined to comment on Tuesday but cited a statement previously shared with Bloomberg, saying that recent events highlight the need for "industry-wide solutions" to "further help secure the supply chain and strengthen enforcement of export control laws."
Deep Insights
The Nvidia CEO's remarks come as Super Micro's co-founder, another executive, and a contractor (all no longer affiliated with the company) were indicted in the U.S. for allegedly participating in a scheme to smuggle servers equipped with AI chips to China worth billions of dollars, an event that occurred two months ago.
Additionally, Super Micro's long-running efforts to remediate internal controls and material weaknesses have drawn attention from accounting experts. Early last year, public auditor BDO issued an adverse opinion, noting material weaknesses in the company.
Last Friday, Francine McKenna, author of the accounting column The Dig, told CFO Dive that given the company's internal turmoil and leadership uncertainty, Super Micro would face difficulties in remediating its internal controls.
Last week, the company announced that Don Clegg, Senior Vice President of Global Sales, retired on May 15 and will serve as an independent consultant for six months at a monthly salary of $19,450, according to a securities filing. The filing stated that his resignation was not due to any disagreement with the company regarding operations, policies, or procedures.
The company has not yet hired a new chief financial officer, a recommendation made in late 2024 by an independent special committee that investigated the integrity of Super Micro's audit committee, management, and others. David Weigand, appointed CFO in 2021, remains the company's treasurer.
In its statement, Super Micro also defended its compliance system.
"Our robust compliance framework, bolstered by rigorous due diligence with Nvidia and other partners, including pre- and post-shipment verification, is a critical step in addressing the risk of high-demand technology being illegally diverted to restricted markets," the statement said.
Nvidia did not immediately respond to a request for comment.