(May 21): Taiwanese officials are seeking to detain three individuals for forging documents in order to export Nvidia Corp's artificial intelligence (AI) chips to China, the island democracy’s first such crackdown on semiconductor smuggling.
The trio is accused of making fraudulent declarations about sales of AI servers manufactured by US-headquartered Super Micro Computer Inc, so that they could ship them to China, Hong Kong and Macau in violation of US trade rules. Super Micro assembles AI chips from the likes of Nvidia into systems that are installed in data centres and used to train and run models like OpenAI’s ChatGPT. Washington has restricted sales of the hardware to China since 2022.
The defendants “fully knew” that sales of the servers are “strictly regulated” by the US, the Taiwan Keelung District Prosecutors Office said in a Thursday press release. They “conspired to purchase the servers in Taiwan and export them using fraudulent documentation. They are consequently suspected of offences including forgery of documents under the Criminal Code”.
The prosecutor’s office executed search warrants at 12 locations on Wednesday, the statement said, including the defendants’ residences. The trio, along with related witnesses, were apprehended and interviewed, according to the statement.
Prosecutors identified the defendants only by their surnames. Super Micro and Nvidia didn’t immediately respond to requests for comments outside of normal business hours. The two companies have both previously emphasised their commitment to abiding by US export controls and all other applicable laws.
Super Micro’s servers are also the subject of the biggest chip smuggling prosecution in the US, where authorities arrested the firm’s co-founder — who has pled not guilty — for allegedly diverting billions of dollars worth of Nvidia chips to China. That case reverberated from Silicon Valley to Southeast Asia, a sign that Washington is getting serious about addressing a chip smuggling problem that Nvidia boss Jensen Huang once denied exists.
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To be sure, the challenge is industrywide. Hardware made by companies including Dell Technologies Inc and Hewlett Packard Enterprise Co has also appeared in alleged illicit chip trade rings detailed by prosecutors in the US and Singapore. At no point have authorities publicly accused the various server makers of wrongdoing across the cases, of which there are now at least seven, including the Taiwan one.
The Wednesday action marks a significant step for Taipei, which for years stood on the sidelines of AI chip export debates as Washington pursued ever-stricter policies. Under President Lai Ching-te, Taiwan has been increasingly assertive in protecting its technological edge, including by prosecuting trade secret leakage and imposing unprecedented export restrictions on two major Chinese chip champions.
Lai also promised last year to address unspecified US concerns regarding export controls, which have been Washington’s primary tool for constraining China’s AI ambitions.
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The move doesn’t mean that Taiwan, which is home to the vast majority of AI chip manufacturing, is matching US curbs on processors from Nvidia and Advanced Micro Devices Inc (AMD). Those American rules require companies to seek Washington’s permission for virtually all AI chip exports to China, and Taipei — like other Asian capitals — has long been reluctant to take such an aggressive step.
Rather, the development indicates Taiwan’s interest in using local laws, specifically around fraud, to get at the same issue. That is similar to the approach Singapore took last year when arresting three men for misleading server suppliers about the ultimate destination of hardware first sent to Malaysia.
Uploaded by Tham Yek Lee
