Taiwanese authorities executed raids on Super Micro Computer’s local offices on June 29, searching the company’s operations as part of a widening investigation into alleged smuggling of Nvidia AI chips to China.

The Keelung District Prosecutors Office searched SMCI’s Taiwan office, three affiliated company sites, and the homes of six individuals connected to the firm. SMCI shares dropped as much as 9% on the news.

A $2.5 billion conspiracy allegation

The Taiwan raids follow US federal charges unsealed back in March 2026 against SMCI co-founder Yih-Shyan “Wally” Liaw and two others. Prosecutors claim the defendants orchestrated a conspiracy to funnel roughly $2.5 billion worth of Nvidia-equipped servers through shell companies in Southeast Asia, ultimately destined for China. Liaw has pleaded not guilty.

The Taiwan investigation had already picked up momentum before the June raids. In May 2026, three suspects were arrested and approximately 50 servers were seized, setting the stage for the broader searches that followed weeks later.

SMCI issued a statement saying it is cooperating with authorities and pointed to its past collaboration on related seizure efforts.

Nvidia’s awkward position

Nvidia CEO Jensen Huang visited Taipei in May 2026 and used the trip to publicly urge stronger compliance from SMCI.

What this means for investors

The immediate market reaction tells part of the story. SMCI shares falling 7-9% on raid headlines reflects a stock that has become acutely sensitive to legal and compliance risk.

The SMCI probe is essentially a stress test for the entire semiconductor export control regime. If prosecutors can demonstrate that billions of dollars in restricted hardware were successfully routed to China through shell companies, it raises serious questions about enforcement gaps across the industry.

The investigation suggests that US and Taiwanese authorities are increasingly willing to coordinate cross-border enforcement actions targeting export control violations.