Nvidia Taiwan employee among 9 indicted for smuggling 74 AI servers to China despite pledge not to sell there

A group that bought large quantities of servers loaded with Nvidia's advanced AI chips — hardware subject to US export controls on China — and smuggled them to China has been indicted in Taiwan. Investigators found the suspects had circumvented export controls by getting onto Nvidia's approved buyer "whitelist" and making it appear the servers were in normal use at a Taiwanese data center.

Taiwan's Keelung prosecutors indicted nine people, including an employee of Nvidia's Taiwan branch, on charges of breach of trust and document forgery in connection with the illegal export of Supermicro servers equipped with Nvidia's advanced AI chips to China, according to Taiwanese media including the Liberty Times and China Times on Tuesday. Prosecutors have sought sentences ranging from one year and six months to six years in prison for the defendants.

According to prosecutors, Chen Min-yen, president of Peihu Technology, decided last year to pursue the purchase of flagship AI servers after concluding that reselling them would be highly profitable. Peihu Technology also secured a place on Nvidia's "whitelist" of approved buyers.

Chen and his associates then conspired with a senior manager at Nvidia's Taiwan branch, a representative of Supermicro's Taiwan subsidiary and local resellers to purchase 130 Supermicro servers equipped with Nvidia's high-performance B300 AI chips.

In the process, they submitted documentation stating that Peihu Technology was the end user and pledging not to export or re-export the products to any entity subject to US sanctions.

The actual destination, however, was China. To evade import-export inspections and know-your-customer checks, the group had a reseller make the purchases on their behalf and rented server room space from a Taiwanese data center operator to store the equipment — all to create the appearance that the servers were in legitimate use within Taiwan.

Of the 130 servers obtained this way, 74 were shipped directly to China or handed off to Chinese customers via Indonesia, Japan and Hong Kong. Proceeds from those transactions reached around 600 million New Taiwan dollars (about $18.4 million).

The scheme unraveled when the group tried to move the remaining 56 servers to China. They attempted to route the shipment through a Japanese company, but when Taiwanese customs demanded a strategic high-tech export license, the suspects forged the relevant documents. The forgery was detected, exposing the entire smuggling network and the web of conspirators.

The latest advanced AI chips from Nvidia and other US companies are subject to US export controls restricting their sale to China. The case illustrates how attempts to circumvent those controls — through third countries and transshipment arrangements — continue to proliferate as demand for cutting-edge AI chips intensifies.