Taiwan indicts Nvidia manager over chips shipped to China

Taiwanese prosecutors have indicted a senior Nvidia manager and eight others over an alleged scheme that shipped 74 servers containing B300 chips to China via Japan and Indonesia. They are seeking five years for forgery and breach of trust.

The first known criminal case against an Nvidia employee over AI chip smuggling has reached indictment. Taiwanese prosecutors have charged a senior manager surnamed Chang, whom they call the “core figure” of the scheme, and are seeking five years for forgery and breach of trust.

He was detained in July, and Bloomberg has been unable to reach him since. Nvidia as a company has not been accused of wrongdoing.

The volumes are modest by black-market standards and specific by legal ones. Seventy-four servers containing high-end B300 chips allegedly reached China through Japan and Indonesia, and another 56 were seized before they could leave.

Eight others were charged alongside him. They include two senior Super Micro employees and staff from four more firms, among them the reseller Albatron and Flying Tiger, named as the purported end user.

The economics explain the risk. TNW has reported B300 servers changing hands in China for around $1mn apiece, close to double the American price.

What should trouble the industry is the safeguard that failed. Super Micro’s Taiwan arm will not sell to a buyer that has not passed checks by its own and Nvidia’s staff, including an in-person audit for orders of eight units or more.

Prosecutors say that audit was staged. Chang and one of the indicted Super Micro employees took “unsuspecting” colleagues to a data centre and concealed that Flying Tiger had never leased enough space for the hardware.

Chang then reported the inspection as complete. Super Micro approved a sale of 130 servers, delivered in three phases, of which 74 were routed onward to Chinese buyers.

Nvidia’s answer has been to shrink the approved list. The company has cut more than half its Asian customers from the whitelist that Flying Tiger had managed to join.

Europe watches this with a gap in its own rules. Advanced AI accelerators are not controlled on the EU’s dual-use list, after a Russian veto at the Wassenaar Arrangement blocked multilateral agreement, leaving national measures and American extraterritorial reach to do the work.

So the controls that caught this were Taiwanese and American. The Commission’s reform of its own export regime has been pending since last year, while the servers move through whichever jurisdiction is slowest.