MW Super Micro's stock sinks after co-founder's indictment. Here are Wall Street's biggest questions.
By Britney Nguyen and Emily Bary
While Super Micro wasn't named in a recently unsealed lawsuit, analysts say the charges raise concerns about credibility and controls
The indictment of a Super Micro cofounder for alleged export-control violations "raises serious credibility issues," an analyst says.
Super Micro Computer's stock could see one of its biggest single-day drops in history on Friday as Wall Street assesses the fallout of a co-founder's indictment for alleged export-control violations.
While the server maker itself wasn't named in a newly unsealed indictment, federal prosecutors have charged Wally Liaw, a Super Micro $(SMCI)$ co-founder, board member and vice president of business development, with participation in a scheme that unlawfully diverted advanced Nvidia (NVDA) chips to China.
See: Super Micro co-founder engaged in backdoor scheme to divert Nvidia chips to China, U.S. government says
Liaw had resigned from Super Micro in 2018 after an accounting scandal, but he was rehired as a full-time employee in 2022 and named to the company's board of directors the next year.
"It's one thing being duped once by rogue employees (allegedly) committing crime right under your nose, but [it's] quite another hiring the same person back (as a board director too) and later for that same person to (allegedly) do something worse like this," Bernstein analyst Mark Newman wrote in a note to clients.
The indictment "raises serious credibility issues that could impact business," he added.
Super Micro shares are off 25% in premarket action Friday.
Super Micro immediately tried to distance the company from the two employees and one contractor that the U.S. government indicted. "The conduct by these individuals alleged in the indictment is a contravention of the company's policies and compliance controls, including efforts to circumvent applicable export control laws and regulations," Super Micro said in a press release.
The company "maintains a robust compliance program and is committed to full adherence to all applicable U.S. export and re-export control laws and regulations," it added.
Super Micro didn't respond to a MarketWatch request for comment. MarketWatch was unable immediately to contact Liaw or other individuals named in the indictment.
Here are some of Wall Street's biggest questions in the aftermath of the charges.
How deep does the problem go?
Liaw, along with fellow Super Micro employee Ruei-Tsang Chang and contractor Ting-Wei Sun, were accused of working with a company in Southeast Asia to order "large allocations" of the U.S. company's servers, then supporting the "onward transshipment to China."
The indictment alleges that the three arranged for servers valued at $2.5 billion to be illegally diverted. Prosecutors charge that the "scheme" involved using hair dryers to transfer serial numbers from real Super Micro servers to "dummy" versions in order to conceal from inspectors that the actual Super Micro servers were in China.
"The key question is whether this is an isolated case of 'rogue employees' or evidence of systemic compliance gaps inside [Super Micro's] global sales and channel operations," Bernstein's Newman wrote.
Will Super Micro lose out on sales?
Newman wondered whether Nvidia will "feel the need to further distance" itself from Super Micro in the wake of the scandal.
If so, Super Micro could lose out on supply of Nvidia graphics processing units, "which in turn could have devastating impact" on the server maker, Newman wrote.
Wedbush's Matt Bryson also saw "room for concern as to how thisdevelopment might affect [Super Micro's] business including its relationships with suppliers and customers."
Does Dell stand to gain?
Dell Technologies shares $(DELL)$ are up about 4% in Friday premarket action, with analysts suggesting the server company could capitalize on its rival's struggles.
"Dell might be the most immediate beneficiary as Dell has emerged as the other significant supplier of AI servers/equipment to large non-hyperscale AI customers," Bryson wrote.
He also flagged Cisco Systems $(CSCO)$ and Hewlett Packard Enterprise $(HPE)$ as companies that could benefit if Super Micro sees its operations severely disrupted.
Did Nvidia know anything?
Nvidia's stock is little changed in Friday's premarket trades, and Bernstein's Newman doesn't think the company appears to have "any fault" in the alleged scheme involving Super Micro employees, he said.
"Nowhere" in the indictment "does it suggest that Nvidia had any knowledge or inkling as to what may have (allegedly) been going on, and we are confident that the company takes their responsibilities around the current export control regime extremely seriously," Newman noted.
In a statement, an Nvidia spokesperson said: "Unlawful diversion of controlled U.S. computers to China is a losing proposition across the board." The company "does not provide any service or support for such systems, and the enforcement mechanisms are rigorous and effective," the spokesperson added.
-Britney Nguyen -Emily Bary
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March 20, 2026 09:06 ET (13:06 GMT)
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