Shareholders of Super Micro Computer Inc on Wednesday sued the Silicon Valley server maker, accusing it of committing securities fraud by concealing its dependence on sales to China that violated US export laws, leading to criminal smuggling charges involving Nvidia Corp chips against a cofounder and two others linked to the company.
In a proposed class action suit filed in San Francisco federal court, shareholders said Super Micro overstated its business prospects and inflated its stock price by knowingly failing to disclose that a significant portion of server sales went to companies in China, and the company had material weaknesses in its compliance with export control laws.
Super Micro shares sank 33 percent on Friday last week after criminal charges were announced a day earlier against Liaw Yih-shyan (廖益賢), a cofounder and director; Chang Ruei-tsang (張瑞滄), a sales manager in Taiwan; and Sun Ting-wei (孫廷瑋), a contractor.
Photo: Reuters
The decline wiped out about US$6.1 billion of the San Jose, California-based company’s market value, and Liaw resigned from Super Micro’s board.
Other defendants in the civil lawsuit are Super Micro CEO Charles Liang (梁見後) and chief financial officer David Weigand.
Super Micro did not respond to requests for comment.
Prosecutors said Liaw and Chang directed an unnamed company in Southeast Asia to buy servers with Nvidia’s chips, and that the company bought US$2.5 billion of servers in 2024 and last year.
Super Micro has said it is cooperating with the US government, and the alleged criminal conduct violates its policies.
Neither Super Micro nor Nvidia was criminally charged, and Nvidia is not a defendant in the shareholder lawsuit.
It is common for shareholders to sue companies after unexpected negative news causes stock prices to decline.
Wednesday’s lawsuit seeks unspecified damages for Super Micro investors between April 30, 2024, and March 19.
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