TAIPEI – When Taiwan’s Keelung District Prosecutors’ Office raided 12 locations on Monday – including the offices of Super Micro Computer, data center operator Chief Telecom, and server distributor Albatron Technology – investigators were following the trail of approximately NT$700 million worth of Nvidia’s most advanced AI chips allegedly routed through Japan and into China. What they could not do, under Taiwanese law, was charge anyone for the act of exporting those chips.
The nine suspects now under investigation – up from three when the probe began in May – face charges of document forgery and fraudulent customs declarations. That is not a technicality. Taiwan has no statute that directly criminalizes the sale of AI chips to China, which means the country increasingly positioned as a front-line enforcer of US semiconductor export controls is running its enforcement apparatus on the legal equivalent of an expired warrant.
Three of those suspects are newly detained: an Albatron Technology vice president surnamed Lu, two Super Micro Taiwan managers surnamed Wang and Lin, and two Chief Telecom employees – a manager surnamed Wang and an employee surnamed Chu – who were held and then released on bail. Three others, workers surnamed You, Wang, and Chen, have been in custody since May 20, when investigators discovered 50 GB300-equipped AI servers at a warehouse before they could leave the island. NT$9 million in cash was also seized.
The case connects directly to a US Department of Justice indictment unsealed on March 19, which named three defendants: Yih-Shyan “Wally” Liaw, 71, the co-founder of Super Micro Computer and one of Silicon Valley’s best-known Taiwanese-American entrepreneurs; Ruei-Tsang “Steven” Chang, 53, Super Micro’s Taiwan general manager; and a broker named Ting-Wei “Willy” Sun, 44. The DOJ alleged the trio conspired to divert more than $2.5 billion in Nvidia AI servers to China, evading US export controls by routing shipments through a network of front companies in Thailand, Japan, and Hong Kong before the equipment reached Chinese end users.
The mechanics of the scheme, as described by Taiwanese investigators, went beyond opportunistic diversion. Suspects allegedly stripped serial-number stickers from servers using heat guns, then replaced them with numbers from consumer electronics – including hair dryers – so that any physical audit would turn up benign appliances rather than restricted computing equipment. Dummy server shells were placed in warehouses where compliance inspectors might look. Customs filings described the contents as something other than what they were. Investigators also allege at least one shipment was routed through Japan before reaching China, adding a transit-country layer to obscure the final destination.
Nvidia CEO Jensen Huang, himself Taiwan-born, addressed the scheme at a public appearance in May. The data centers built on diverted chips, he said, were “a dead end” – Nvidia will not service hardware it cannot verify through its own supply chain, which means buyers who acquired smuggled servers are operating equipment that will eventually fail with no path to support or replacement. That warning has not deterred the market for diverted chips, which the DOJ valued at $2.5 billion even before the Taiwan investigation expanded.
Chris McGuire at the Council on Foreign Relations described chip smuggling as “a really significant problem” in Taiwan and Southeast Asia. Taiwan’s probe is the first time the island has brought criminal prosecutions specifically over Nvidia chip diversion – and it is doing so without the statutory tools the conduct actually requires. Prosecutors are relying on document-forgery statutes because that is what exists. The export of the chips themselves, however restricted under US controls, is not yet a crime in Taiwan.
That gap is now under legislative pressure. Taiwan’s parliament is drafting rules that would directly criminalize AI chip diversion, creating the legal basis for charges that go after the core conduct rather than the paperwork surrounding it, the Japan Times reported. When those rules will pass, and in what form, is not yet determined. The legislative timeline puts prosecutors in the position of building a criminal case on forgery charges while the conduct they are actually investigating remains legal under domestic law.
The broader US export-control framework that the Taiwan probe is meant to enforce has itself been contested in recent months. As this publication reported, even Anthropic’s AI research briefly became entangled in export control disputes over what constitutes a weapons-enabling capability. The Super Micro case represents the opposite end of that spectrum: not a dispute about where the line is, but an alleged attempt to physically move hardware across a line everyone agreed was there.
Super Micro said the conduct in question “is a contravention of company policies and compliance controls” and that it is cooperating with investigators. The company previously settled a Bureau of Industry and Security civil penalty for $125,400 in 2022 over a separate export control matter. Shares fell roughly 8 percent in US trading after news of the June 29 raids emerged. Albatron Technology dropped 10 percent on the Taiwan Stock Exchange. Chief Telecom fell more than 2 percent.
China’s own regulatory posture has hardened in parallel, with Beijing this week passing legislation giving the State Council broader powers to retaliate against countries restricting Chinese firms’ access – a dynamic that complicates the diplomatic backdrop for any Taiwan-US coordination on chip enforcement, as this publication reported. The US trial in the DOJ case is scheduled for November 2026. What charges the Taiwan suspects may face if parliament’s export legislation passes before that date is, for now, a question prosecutors in Keelung cannot yet answer.
