Super Micro: Fresh Evidence Of Accounting Manipulation, Sibling Self-Dealing And Sanctions Evasion At This AI High Flyer

• Super Micro Computer Inc. is a $35 billion server maker based in Silicon Valley, California that has ridden the wave of AI enthusiasm.
• Our 3-month investigation, which included interviews with former senior employees and industry experts as well as a review of litigation records, international corporate and customs records, found glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.
• In 2018, Super Micro was temporarily delisted from Nasdaq for failing to file financial statements. By August 2020, the company was charged by the SEC for “widespread accounting violations,” mainly related to $200+ million in improperly recognized revenue and understated expenses, resulting in artificially elevated sales, earnings and profit margins.
• Less than 3 months after paying a $17.5 million SEC settlement, Super Micro began re-hiring top executives that were directly involved in the accounting scandal, per litigation records and interviews with former employees.
• A former salesperson told us: “Almost all of them are back. Almost all of the people that were let go that were the cause of this malfeasance.”
• According to a lawsuit filed in April 2024, Super Micro waited only 3 months after the SEC settlement before restarting “improper revenue recognition,” “recognizing incomplete sales,” and “circumvention of internal accounting controls”.
• Even after the SEC settlement, pressure to meet quotas pushed salespeople to stuff the channel with distributors using “partial shipments” or by shipping defective products around quarter-end, per our interviews with former employees and customers.
• One former salesperson described pushing products to distributors based on made-up demand forecasts, completing a partial shipment, then later coming up with an excuse for why the rest didn’t happen. “And now you have a problem. Accounting problem maybe.”
• Former employees told us Super Micro’s business culture has not improved. Former senior sales director: “I don’t think the behavior of the company in many ways has changed in the 5 years since I started, and I started shortly after that delisting problem.”
• Three senior employees who left in early 2018 amidst the accounting scandal were rehired, individually serving as (1) a member of the board of directors (2) a consultant serving close to the CEO (3) and a VP of business development.
• Former CFO Howard Hideshima left the company in January 2018 and was later individually charged by the SEC with accounting violations. In May 2023, he was hired by a key related party owned by Super Micro CEO’s brother.
• A new CFO, praised by co-workers for his integrity, was hired in January 2018 to help the company recover from the scandal. He helped Super Micro re-list but resigned in January 2021. A former sales director suggested that he was edged out by the company.
• Beyond fresh questions around its revenue accounting, we found that Super Micro’s relationships with both disclosed and undisclosed related parties serve as fertile ground for dubious accounting.
• For example, disclosed related party suppliers Ablecom and Compuware, controlled by Super Micro CEO Charles Liang’s brothers, have been paid $983 million in the last 3 years. Ablecom is also partly owned by Super Micro CEO Charles Liang and his wife.
• The relationships seem oddly circular. Super Micro provides components to the entities which assemble them and sell them back to Super Micro. They also rent warehousing and factory space to Super Micro even though it has its own sprawling factory.
• The related parties seem to do little other business: ~99.8% of Ablecom’s exports to the U.S. since 2020 were to Super Micro, and ~99.7% of Compuware’s U.S. exports were to Super Micro, per trade records.
• In addition to the concerns around the disclosed related parties, we found evidence of undisclosed related parties. The youngest brother of Super Micro’s CEO owns two Taiwan-based entities that make server components. Media reports and former employees indicate the entities are Super Micro suppliers.
• Both entities operate out of the Super Micro Science and Technology Park in Taiwan, but Super Micro has not disclosed related party transactions with them.
• Another brother of Super Micro’s CEO operates a disclosed related party but is also the director and shareholder of undisclosed Hong Kong and Taiwanese entities, which appear to resell Super Micro products and provide “professional OEM services.” It operates out of the same building as related party Compuware.
• Collectively, disclosed and undisclosed related parties pose accounting risks relating to revenue recognition and reported margins. A former executive told us: “Basically it’s a governance issue and just kind of shows you that Charles doesn’t give a shit what you think…you’re right to worry, though, that you just never know what’s lurking.”
• In addition to the CEO’s brothers, the company has an odd relationship with a key customer. In February 2024, Super Micro made an undisclosed investment in tech startup Lambda Labs as part of its $320 million funding round, per Bloomberg and per a confirmation we received from Lambda’s COO.
• In August 2024, Super Micro signed an “unusual” $600 million contract to lease space at a California data center and sub-lease it to Lambda. The CFO glossed over questions about the reason for this arrangement.
• In October 2023, two related parties run by CEO Liang’s brothers, one of them partially owned by Super Micro’s CEO, reportedly invested in small Taiwanese tech company Leadtek. Leadtek’s website advertises products almost identical to Super Micro’s, yet Super Micro discloses no relationship with Leadtek in what appears to be a clear undisclosed related party.
• Super Micro has claimed its liquid cooling technology will “revolutionize the industry” and is its “competitive edge.” But at a recent industry conference, Super Micro featured related party Ablecom’s liquid cooling solutions, per an Ablecom engineer.
• Ablecom has several patents for its liquid cooling technology. Despite this, Super Micro has never disclosed any related party involvement in its liquid cooling technology.
• Besides questions around related parties and proprietary product offerings, in 2006, Super Micro pleaded guilty to a felony count of exporting banned components to Iran. The CEO said the company was in its infancy and had learned from its mistakes.
• When Russia invaded Ukraine in February 2022, the U.S. government imposed stringent restrictions and bans on exports to Russia of high-performance computers and components.
• Super Micro disclosed that some of its products were subject to export bans and said it was halting all sales and had “not recorded revenue” from Russia since the day before the war started.
• Exports of Super Micro’s high-tech components to Russia have spiked ~3x since the invasion of Ukraine, apparently violating U.S. export bans, according to our review of more than 45,000 import/export transactions.
• At least 46 companies that handled Super Micro products to Russia since the invasion are now under OFAC sanctions or on U.S. government watchlists.
• Almost two-thirds of Super Micro’s exports to Russia since the invasion correspond to “high priority” components that the Russian military may be diverting to the battlefield, per U.S. government warnings.
• One of the biggest importers of Super Micro products in Russia is a supplier to one of Russia’s largest “supercomputers” at a once-secret, now-sanctioned research center. That importer, Niagara Computers, has received at least $46.3 million worth of Super Micro products since the start of the Russia-Ukraine war, per trade data.
• The sales were initially made through a distributor in California, but were later made through 3 newly-formed Turkish shell companies, including one that was eventually sanctioned for smuggling restricted items to Russia.
• Almost $30 million worth of Super Micro components have also been shipped to Russia’s largest importer of dual-use civilian-military chips via a newly created Hong Kong shell entity. That Russian importer is now under OFAC sanctions.
• Since 2016, Super Micro has had a joint venture with a Chinese state-run company called Fiberhome, which is involved in a campaign of “human rights violations and abuses,” high-tech surveillance, and repression of ethnic communities in western China, per the U.S. government.
• Super Micro has sold ~$196 million of sophisticated computer components to the joint venture since Fiberhome was watchlisted by the U.S. government in 2020. Super Micro justifies the sales by saying the JV entity itself wasn’t watchlisted, even though its partner was.
• Besides accounting issues and sanctions evasion, competition and quality concerns have resulted in major companies dropping Super Micro entirely or reducing their share.
• Nvidia is a key partner and chip supplier to Super Micro. In May 2024, CEO Jensen Huang publicly endorsed Super Micro’s competition: “Nobody is better at building end-to-end systems of very large scale for the enterprise than Dell.”
• CoreWeave was Super Micro’s largest customer over the last year, per Bloomberg Intelligence. But in December 2023, Dell announced a deal with CoreWeave for “thousands” of GPU servers, potentially worth over $1 billion.
• Tesla had been sourcing its servers exclusively from Super Micro, per Barclays Research in September 2023. But recent reports in May 2024 and posts by Elon Musk show Dell has now won major deals from Tesla, and Musk’s xAI, eroding Super Micro’s exclusivity.
• Super Micro has conceded that it is “under-indexed” with the world’s largest technology companies, called “hyperscalers.” Amazon AWS was a customer but cut ties after delivery issues, per a former employee.
• Digital Ocean, a U.S. cloud service provider, switched from Super Micro to Dell after service issues, according to a Digital Ocean employee, describing the relationship as “a train wreck of sorts” fraught with reliability issues.
• Genesis Cloud is touted as a “success story” on Super Micro’s website. But current and former employees told us otherwise: “Catastrophic. It is, on the technical side, one of my worst experiences I’ve had…in the industry.”
• GMI Cloud, a start-up GPU cloud provider in Asia and the U.S., told us they experienced a malfunction rate of 17.5% on its orders of 256 Super Micro servers. GMI is now moving away from Super Micro to HPE less than a year after its first order, per an employee.
• NexGen Cloud, an Nvidia partner, disclosed in October 2023 that it was investing $1 billion to build an AI super-cloud in Europe with over 20,000 Nvidia GPUs. But a NexGen employee told us that sometimes up to half of the orders received from Super Micro had firmware issues.
• Multiple former employees and channel partners confirmed that after-sales service is undermining Super Micro’s ability to retain customers. One former salesperson said: “It’s their Achilles heel. It’s just horrible.”
• All told, we believe Super Micro is a serial recidivist. It benefitted as an early mover but still faces significant accounting, governance and compliance issues and offers an inferior product and service now being eroded away by more credible competition.

Initial Disclosure: After extensive research, we have taken a short position in shares of Super Micro Computer, Inc. (Nasdaq:SMCI). This report represents our opinion, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report.

Background: A $35 Billion Server Manufacturer Based In Silicon Valley

Super Micro Computer (“Super Micro”) is a $35 billion high-performance server and storage solutions manufacturer founded in 1993 and headquartered in San Jose, California, in the heart of Silicon Valley. The company originally listed on Nasdaq via a $64 million Initial Public Offering in 2007. 

Super Micro is a “Rack-Scale Total IT Solutions provider”, offering servers, storage systems, switches, software and global support services. It sells into the following segments: enterprise data centers, cloud computing, artificial intelligence, 5G, and edge computing.

Servers and storage systems accounted for 92% of the company’s net sales in 2023. Geographically, 61% of its latest quarterly revenue came from the U.S., followed by 24% from Asia and 10% from Europe, per its August 6^th, 2024 investor presentation.[1] [Pg. 11]

As of its most recent quarter, Super Micro reported that 64% of sales came from its “OEM Appliance & Large [Data Center]” vertical, while 34% of sales came from “Enterprise & Channel” such as technology resellers.[2] [Pg. 12]

Super Micro was co-founded by current CEO Charles Liang, an electrical engineer and systems designer, and his wife Sara (Chiu-Chu) Liu, an accountant. The company was described as a “One man, or at least one-family, powerhouse” in a 2008 profile by the New York Times.

Super Micro’s market cap has increased by 16x over the last 3 years, from $2.2 billion by the end of 2021 to $35 billion in 2024.

Super Micro was added to the S&P 500 in March 2024, and included in the Nasdaq 100 in late July 2024.

Bull Case: Growth Runway Driven By AI Server Market Demand, Close Relationship With Nvidia, And Proprietary Liquid Cooling Technology

The bull case for Super Micro is that it offers exposure to meteoric growth in demand for AI chips.

Super Micro’s server business growth has been driven by increasing demand for GPUs, high performance computing, and rack-scale solutions, particularly for data centers and AI applications, per Super Micro’s 2023 10-K.

The company is adding capacity to fulfill increasing demand. Super Micro reported it will increase monthly rack scale production capacity from 4,000 racks at the end of December 2023 to 5,000 racks by the end of FY 2024. [Pg. 6]

Super Micro has also been working on liquid cooling technologies for racks with higher energy AI workloads. [Slide 6] Investors have focused on its scale, vertical integration, relationship with Nvidia and quicker time to deliver than peers.[3] [1]

Super Micro has seen a 110% year over year increase in revenue growth and a 61% compound annual growth rate over the last 3 financial years. [1, 2, 3]

Sell side consensus forecasts 87% revenue growth in FY 2025, per Bloomberg, predicting rapid further sales growth ahead.

Fundamentals: Super Micro Competes With Low Cost “ODM” Manufacturers On One Hand And Enterprise Behemoths Like Dell And Hewlett Packard On The Other, Squeezing Margins

The Company’s Core Product Is Increasingly Becoming Commodity-Like

Super Micro’s core offering is an increasingly commoditized product: the server.

“The server is not a feat of engineering”, one former Super Micro executive told us in an interview.

Key to this is that the company now faces major competition in the AI server market from well-established technology giants like Dell Technologies and Hewlett Packard. Sell-side analysts have raised concerns that Dell has been selling its AI servers at “near-zero margins” to remain competitive, as reported by CNBC.

In August 2024, Taiwanese manufacturing giant Foxconn announced that it planned for AI servers to be its next “trillion [Taiwanese]-dollar revenue product”.

Super Micro also faces cost competition from less expensive Taiwanese “ODMs” (original design manufacturers), that operate at thin gross profit margins between 4.1% and 10.7% compared to Super Micro´s at 14.1% over the last 12 months.[4] [5]

Historically, Super Micro has managed to maintain significantly higher gross margins than its peers.

However, gross margins have started to collapse, from consistently above 15% in fiscal years 2020-2023 to 11.2% in Q4 2024 (March-June for Super Micro).

Part I: Recent Evidence Of Channel Stuffing And Accounting Violations

Over the last 3 months, we investigated Super Micro from the ground up, from entry-level factory workers to former executives and leaders, to understand its business model. This involved extensive interviews with former employees, competitors, distributors, resellers and customers, as well as reviewing company documents, litigation records, international corporate records and customs records.

Our investigation found major corporate governance red flags and evidence of continued improper revenue recognition, following similar charges against the company that resulted in its delisting in 2018 and an SEC charge in 2020.

Background: In 2018, Super Micro Was Delisted From Nasdaq For Failing To File Timely Financial Statements

Almost Two Years Later, In Early 2020, It Regained Nasdaq Compliance But Was Charged By The SEC Later That Year For “Widespread Accounting Violations” Mainly Related To Over $200 Million In Improperly Recognized Revenue

In August 2018, Super Micro shares plunged to a five-year low and the company was delisted from Nasdaq for failing to file financial statements for two consecutive years. 

Super Micro was able to regain compliance and relist on Nasdaq in January 2020. However, in August 2020, the SEC charged Super Micro with “widespread accounting violations.”

The SEC found the company essentially engaged in channel stuffing, claiming executives “pushed employees to maximize end-of-quarter revenue”.

Channel stuffing is a deceptive revenue reporting practice whereby companies inflate sales through over-shipping and over-invoicing products to distributors or customers who may not have ordered, needed, or been able to sell the products.

An SEC order stated the company “improperly accelerated revenue recognition and reporting” in multiple ways, including recognizing revenue before delivering goods, sending goods before specified delivery dates, sending incomplete and mis-assembled goods to customers and improperly changing shipment terms, among other methods.

The SEC alleged that Super Micro prematurely recognized over $200 million in revenue from FY 2015 through FY 2017. [Pgs. 4-8]

One former sales director we interviewed described the channel stuffing during the period in question:

“There was strategies to get things across the quarter line, I heard [of] a shell, you know, dark, warehouses that product would be shipped to and then brought back the next quarter.”

Super Micro settled the SEC charges for $17.5 million in 2020 and CEO Charles Liang was forced to reimburse Super Micro $2.1 million in stock sale profits.

After relisting and settling the SEC charges, Super Micro told investors that the accounting and financial issues were in the past and that the company had made a “successful comeback”. At the time of relisting in January 2020, CEO Charles Liang said:

“We are pleased to begin a new chapter for Supermicro that is based on improved internal controls and a dedication to profitable growth.” [1]

Not Even 3 Months After The SEC Settlement, The Company Began Rehiring Top Executives Involved In The Accounting Scandal

Former Super Micro Salesperson: “Almost All Of Them Are Back. Almost All Of The People That Were Let Go That Were The Cause Of This Malfeasance.”

Normally, when companies are caught in major accounting scandals, they will fire and permanently distance themselves from the culpable individuals to show that they take corporate governance seriously.

However, a new lawsuit filed late April 2024 by a former Super Micro general manager, responsible for leading the company’s global service team, alleged that the company rehired key employees who had been “associated with the prior unlawful accounting actions”. [Pg. 5]

Six of the individuals mentioned in this new litigation are listed as current employees of Super Micro, per online profiles with LinkedIn and ZoomInfo.[6] [1, 2, 3, 4, 5, 6]

One former senior salesperson at Super Micro confirmed to us:

“Almost all of them are back. Almost all of the people that were let go that were the cause of this malfeasance.”

Key Rehire #1: Wally Liaw, Super Micro’s Co-Founder And Former Senior Vice President Of International Sales During The Accounting Scandal, Resigned In January 2018

In 2021, He Was Rehired As A Consultant And By 2023, Was Promoted Back To Super Micro’s Board Of Directors

Wally Liaw was one of the co-founders of Super Micro, co-founding the company in 1993, per a company press release.

In August 2017, Super Micro announced it was unable to file its annual report. In January 2018, Super Micro announced Liaw’s resignation along with a trio of executives, including the CFO.

Liaw was also named in the 2024 lawsuit, which alleged he was one of the employees associated with the company’s past fraudulent accounting activity. [Pg. 4]

When we spoke to former Super Micro executives, they told us Wally Liaw presided over the sales teams that were involved in the previous accounting violations:

“If you go back to Wally’s team, every one of those [people] has their hand in that mess. You can promise yourself that.”

Another former Super Micro executive who was aware of the investigations told us they believed Liaw had been directly involved:

“The stuff I remember that was a little bit more egregious…an example, putting stuff on a truck and [that] truck would sit in someone’s parking lot for a few days. That to me was more of like an arrangement with the transportation company. Not great… And then based on the investigation, it sounds like it was Wally. So then Wally got let go.”

In May 2021, Liaw was rehired as a consultant to Super Micro, before joining the board again in December 2023, per Super Micro’s press release.

One former executive told us they had questioned the decision to rehire Wally, asking at the time:

”Why are we having this conversation about Wally coming back as a contractor? So when I saw him come back, I had the same thought, like, wow, that’s, uh, that’s interesting.”

Key Rehire #2: Phidias Chou, Senior Vice President of Worldwide Sales During The Accounting Scandal, Resigned In January 2018

In April 2024, He Attended A Super Micro Meeting Alongside CEO Charles Liang At Asia University, Taiwan, Where He Was Identified As “Deputy CEO”

In 2018, Senior Vice President of Worldwide Sales, Phidias Chou, resigned from the board of directors alongside the former CFO and Wally Liaw during the time period of the accounting scandal.

Chou was also specifically alleged to be one of the sales members associated with prior unlawful activity, per the same 2024 legal complaint. [Pg. 4]

Normally, leaving amid an accounting scandal would be the end of an executive’s association with a firm. Yet a recent media report in April 2024 by Asia University, Taiwan, reported that Phidias Chou attended a Super Micro meeting with CEO Charles Liang, where Chou was vaguely identified as “deputy CEO”.

In another article, describing the same meeting, he was simply referred to as a “consultant”.

Key Rehire #3: Salim Fedel, Vice President Of Sales During The Accounting Scandal, Left The Company In March 2018

In October 2020, He Was Re-Hired As Vice President Of Business Development And Strategic Sales

Salim Fedel rose to Vice President of Sales during his employment at Super Micro between 2005-2018, per his LinkedIn profile. His profile states he was “leading a global team of business development and sales managers in the US and MENA regions” by 2018.

The 2024 lawsuit against Super Micro alleged that he, too, was associated with unlawful activities. [Pg. 4] A former executive told us the same:

“He was involved with the restatement. He was one of the sloppy salespeople. He got fired because he was so aggressive.”

After leaving in 2018, he then mostly spent two years at computer hardware manufacturer Asus, before Super Micro rehired him as Vice President of Business Development and Strategic Sales in October 2020, per his LinkedIn. 

Key Rehire #4: Howard Hideshima, Super Micro’s Former CFO, Who Was Charged With Accounting Violations By The SEC, Left In January 2018

In May 2023, He Was Hired By A Key Related Party Owned By Super Micro CEO’s Brother

Howard Hideshima left the firm in January 2018, and unlike others reportedly involved in the scandal, he was later specifically named in the SEC charges for engaging in “improper accounting” and “internal accounting controls failures, which resulted in SMC [Super Micro] systematically prematurely recognizing and reporting revenue and understating expenses”, per the SEC order. [Pg. 2]

He was ordered to pay $351,056 for his role in the improper accounting. [Pg. 2]

Nevertheless, Hideshima was rehired as a consultant in May 2023 to a related party entity of Super Micro called Ablecom Technology, according to his LinkedIn profile. Ablecom is led by Super Micro CEO Charles Liang’s brother. Super Micro’s CEO and his wife own 10.5%. The entity has hundreds of millions of dollars in transactions with Super Micro a year, per its 10-K. [See Part II for more on this.]

A New CFO, Regarded For His Integrity, Was Hired In January 2018 To Help The Company Relist Amidst The Scandal

He Resigned In January 2021. A Former Sales Director Suggested He Was Edged Out By The Company

CFO resignations are often scrutinized closely by investors due to the implications for accounting and compliance practices.

At Super Micro, Kevin Bauer was appointed as CFO in January 2018, when the company was undergoing an audit committee investigation and attempting to file clean financials.

Former employees spoke of Bauer’s role in getting the company back to its listed status. One former executive said:

“Salt of the earth…He´s the kind of guy, you trust that guy never to steal from you or lie. Total boy scout. Total respect for him. He was the one who really fixed the financial situation, like got a restatement done. He was like in a bunker for two years.”

Bauer helped Super Micro relist in January 2020 and settle SEC charges in August 2020. Five months after the settlement, on January 29^th, 2021, Kevin Bauer resigned.

One sales director told us they believed the CFO had been edged out after the restatement and settlement:

“So the SEC probably liked that guy [Bauer]. They [Super Micro] worked it. And as soon as they were ready to go and they cut his head.”

After Bauer’s resignation in January 2021, Super Micro appointed David Weigand to the role of CFO.

A former employee, responsible for internal oversight, told us “it doesn’t seem like” Weigand was “pushing for the same level of transparency” as Bauer:

“Is David [Weigand, Current CFO] pushing for the same level of transparency as Kevin [Bauer, former CFO]? It doesn’t seem like.”

Former Employees Say Super Micro’s Business Culture Has Not Really Improved Despite The SEC Charge Over Accounting Violations

Former Senior Sales Director: “I Don’t Think The Behavior Of The Company In Many Ways Has Changed In The 5 Years Since I Started, And I Started Shortly After That Delisting Problem.”

Former employees explained how these rehires were borne out of long-standing relationships with CEO Charles Liang, who valued loyalty over all else. Per one former sales director:

“I wouldn’t take comfort in that. If people were let go because their practices were questionable, to bring them back would give me less comfort. I don’t think the behavior of the company in many ways has changed in the 5 years since I started, and I started shortly after that delisting problem.”

Another sales director attributed it to nepotism:

“They were hired back. And there was a lot of nepotism. I’m speaking freely.”

Less Than 3 Months After The SEC Charge, Super Micro Restarted “Improper Revenue Recognition”, “Recognizing Incomplete Sales” And “Circumvention Of Internal Accounting Controls” According To A Lawsuit Filed In 2024

An April 2024 lawsuit, brought by the former Head of Global Services, Bob Luong, alleges that Super Micro has continued to engage in falsified revenue recognition after being relisted in 2020.

The complaint specifically alleges, among other issues, that:

1. Revenue was incorrectly allocated to hardware sales rather than service, in the quarter ending December 2020, to artificially boost reported profit margins.
2. Revenue was prematurely booked even when equipment could not be delivered to and installed for customers.
3. Revenue was prematurely booked even when products were faulty or not ready for sale.

Luong tried to blow the whistle on the company and report these issues but was put on leave and later fired as a result, per the ongoing complaint. [Pgs. 7-8]

Our Interviews With Former Employees Corroborate That Super Micro Continued Recognizing Incomplete Sales As Revenue After The SEC Settlement In 2020

Pressure To Meet Quotas Pushed Salespeople To Stuff The Channel With Distributors, Using “Partial Shipments”, Per Former Sales Director

A former salesperson we interviewed described aggressive sales practices similar to those that are alleged in the 2024 lawsuit.

They told us salespeople worked with distributors of Super Micro, including Avnet and Tech Data to over-ship product to boost numbers, in what appeared to be a channel stuffing scheme.[7] This resulted from sales teams being put under “massive pressure” from Charles Liang each quarter, per the same salesperson.

“The fastest way to really build up those numbers is to call Avnet, Tech Data your rep there and say, listen, I need you to tell me you’re going to take 50 units. Can you do it?

“Yeah, I mean, forecast me a number. Tell me you need to get these things, stuff. We’ll do a partial shipment and we’re good. It’ll take them 45 days to come up with an idea that something did not happen the way they wanted. And now you have a problem. Accounting problem maybe.”

When we spoke to a salesperson at Avnet, they told us that unlike Super Micro, competitor Dell did not have inventory buildup with distributors, owing largely to high demand:

“Their demand is too much where if they [Dell] don’t have it paid for already, it’s not there. All of that stuff is spoken for because it has a check in hand, and Dell is basically already sold it”

By contrast, Super Micro regularly had inventory build-up with Avnet:

“Super Micro’s flexible with their inventory where we can build whatever we want with it. Dell won’t let us do that.”

“Super Micro is just happy they have the check. We [Avnet] paid for it. And then they’re like, you do whatever you want. We got our money.”

Our Interviews Also Corroborate Further Revenue Recognition Issues Related To Shipping Highly Defective Products Around Quarter-End

An employee at Genesis Cloud, a current Super Micro customer, highlighted a specific example that resembled past channel stuffing allegations. In June 2023, closing in on Super Micro’s financial year end, Genesis was shipped “pre-production” servers that were not ready for use:

“We had massive problems with Super Micro, overpromising [and] under-delivering. Shipping pre-production. They were ever so proud to tell us that they were shipping us the first production release of the Gaudi server or Gaudi 2 server. And when it arrived at our data center…. [it was a] pre-production, unit, with basic quality firmware, things like that. We had no end of issues with it.”

We spoke to an employee at another current Super Micro customer, Crusoe AI, a GPU cloud provider “built…for scale”. They told us an order for AI servers, comprising 1,000 GPUs, was shipped at quarter end, in March 2024, with an estimated 40% GPU failure rate.

“We ordered that first batch of L40S’s, and we had something like a 40% [GPU] card failure rate…”.

They went on to question basic assembly and testing at Super Micro:

“We just literally went through, ripped every server open…took every card out, cleaned it off, put it back, and then it worked. And so we’re like, hey, guys, did you just not test this? Did you not build them properly? Did they get jiggled in transit? Like, what the hell?”

Part II: Super Micro Has Done Nearly $1 Billion In Transactions With Related Party Entities Controlled By The Liang Family Over The Last 3 Years

Beyond re-hiring executives reportedly involved in its accounting scandal and ongoing signs of questionable revenue recognition, Super Micro exhibits other glaring governance red flags.

These fall under the umbrella of what would be expected from a company continuing to manipulate its financials: namely, related party dealings, mainly with supplier companies operated by the younger brothers of Super Micro´s CEO. These include both disclosed and suspected undisclosed related party dealings (the latter of which are further detailed in Part III).

Such related party relationships with suppliers can be used to distort financial metrics like gross margins and profitability:

• If a related party undercharges a public company, gross margins and profitability can appear better than otherwise and the difference can be hidden in the related party’s financials.

• If a related party overcharges a public company, gross margins and profitability can collapse as insiders loot the public company through higher costs, potentially to benefit close associates or family members of executives of the company.

These issues are made more relevant given Super Micro’s earlier charges by the SEC, which found it “systematically…understated expenses” which “resulted in an understatement of cost of sales and overstatement of gross profit.” [Pg. 9]

Related Party Entities, One Partially Owned By Super Micro CEO Charles Liang And Controlled By His Brothers, Have Been Paid $983 Million In The Last 3 Years

These Companies Assemble Super Micro’s Products, Warehouse Its Components And Rent It Workspace, Even Though Super Micro Has Its Own Sprawling Factory In Taiwan

Former Super Micro Executive: “Basically It’s A Governance Issue And Just Kind Of Shows You That Charles Doesn’t Give A Shit What You Think…You’re Right To Worry, Though, That You Just Never Know What’s Lurking”

Often, manufacturing companies seek to centralize their factories and supply chain with reputable, dependable suppliers in order to streamline costs and product development.

Contrary to this normal approach, Super Micro relies heavily on suppliers privately owned by its CEO’s brothers.

Over the last 3 years since relisting, Super Micro has disclosed in SEC filings that it paid $983.1 million to two privately-owned, related parties – Ablecom and Compuware – for components and services. [1, 2] Both are based in Taiwan.

1. Ablecom was founded in 1997, per its website. Its CEO and largest shareholder is Steve (Jianfa) Liang, a younger brother of Super Micro’s CEO Charles Liang, per the company’s 2023 annual report. Steve Liang owns 28.8% of Ablecom shares along with unnamed “other family members”. Super Micro CEO Charles Liang, and his wife, who also is a director at Super Micro, own 10.5% of Ablecom shares. An unnamed sibling of co-founder Wally Liaw owns 11.7%, per filings.[8] [9]

• Compuware was founded in 2004, per its website. Its CEO is Bill (Jianda) Liang, also a younger brother of Super Micro’s CEO, per the company’s 2023 10-K. Brother Steve Liang (mentioned above) is also a director and shareholder of Compuware.[10] [11]

As of April 2024, Bill Liang and his immediate family owned 15.83% of Compuware while elder brother Steve Liang and his wife and immediate family owned a much larger 37.67% stake, per shareholdings disclosed in filings by one of its investees. Ablecom owned a 15% stake in Compuware.[12]  [Pg. 18]

Both Ablecom and Compuware are collocated with Super Micro’s facility in Taiwan.[13]

The value of Super Micro’s purchases from Ablecom and Compuware is equal to ~7% of its total cost of sales over the last 3 years. [Pg. 43]

Super Micro’s filings warn “conflicts of interest may arise” with these entities stating:

“We may not negotiate or enforce contractual terms as aggressively with Ablecom or Compuware as we might with an unrelated party, and the commercial terms of our agreements may be less favorable than we might obtain in negotiations with third parties.”

Circular Related Party Relationship: Super Micro Provides Components To Ablecom and Compuware, Who Simply Assemble Them And Sell Them Back To Super Micro

Super Micro’s relationship with its family-owned related parties seems oddly circular.

In the case of Ablecom, Super Micro provides certain components Ablecom needs to make completed chassis for its servers. Ablecom then sells these components back to Super Micro, according to company filings. [Pg. 83]

Similarly with Compuware, Super Micro provides “most of the components” to Compuware for it to manufacture key components like motherboards. It then sells these back to Super Micro with a “value added” fee, per company filings. [Pg. 139] 

Super Micro’s filings characterize the relationship mostly as contract manufacturing and outsourcing of chassis and power supplies:

“We work with Ablecom, one of our key contract manufacturers and also a related party, to optimize modular designs for our chassis and certain other components. We also outsource to Compuware, also a related party, a portion of our design activities and a significant part of the manufacturing of components, particularly power supplies.”

We find it mystifying that Super Micro, a company that boasts of having 6 million square feet of global manufacturing space, would outsource work it is capable of bringing in-house and for which it is supplying most of the components.

Super Micro’s disclosures reveal little about the relationship, and Ablecom and Compuware´s financial reports are not publicly available. Therefore, it is impossible for investors to calculate whether Super Micro is paying a competitive rate for the services and products provided by the CEO´s brothers in Taiwan.

One former Super Micro sales director said that he believed these entities were generating “free money” from the company:

“I’ll be a little bit blunt. It’s free money, right? It’s free top line.”

Another former sales director, responsible for dealing with suppliers, told us they were prevented from buying certain parts elsewhere, like chassis, even when they were available domestically and they were “desperate to find alternative sources”.

Ablecom manufactured approximately 91.9% of the company’s chassis in 2023, per filings.

“There were other manufacturers here domestically that had them but we were not allowed to necessarily go after them because we were getting a better deal with that *air quotes* through Charles’ family in Taiwan to do that.”

Both Entities Appear To Work Almost Exclusively With Super Micro

Export Records Show ~99.8% Of Ablecom´s Exports To The U.S. Since 2020 Were To Super Micro

Export Records Show ~99.7% Of Compuware´s Exports To The U.S. Since 2020 Were To Super Micro

Usually if a supplier offers a true “value-add”, they would be in demand from a wide range of customers.

But both Ablecom and Compuware’s global export sales appear highly concentrated on Super Micro and the U.S., based on available import-export records via Tradesparq, which may not cover all import markets.

Our analysis of those records shows that of Ablecom´s exports to the U.S., ~99.8% were to Super Micro between January 1^st, 2020, and June 30^th, 2024 (the end of Super Micro´s fiscal year).[14] [15]

Reflecting a similar pattern, in the same period, 99.7% of Compuware´s exports to the U.S. were to Super Micro, based on available Tradesparq data.[16]

In short, these related party suppliers have almost no business in the U.S. – and apparently very little elsewhere in the world – apart from Super Micro, suggesting they were set up as extensions of the public company.

A former engineer at Ablecom confirmed the conclusions we drew from trade data. They told us via written message:

“Ablecom is a very special supplier of chassis and thermal module to SMC [Super Micro]…Ablecom has about 90% revenue comes from SMC [Super Micro].”

The engineer also indicated that Super Micro CEO Charles Liang was the person calling the shots at Ablecom and Compuware:

“SMC [Super Micro], Ablecom and Compuware have a regular operation meeting hosted by Charles Liang.”

They said the operation meeting was held monthly and went on to explain that “Steve [Liang] and Bill [Liang] are in charge of chassis and PSU [power supply unit], respectively.”

Super Micro Says Its Liquid Cooling Will “Revolutionize The Industry” And Is Its “Competitive Edge”

But At A Recent Industry Conference, Super Micro Featured Related Party Ablecom’s Liquid Cooling Solutions, Per An Ablecom Engineer’s LinkedIn

Super Micro Has Never Disclosed Related Party Involvement In Its Claimed Liquid Cooling Technology

Super Micro has told investors it has a “competitive edge” in liquid cooled solutions, per its CFO at the Barclays Global Technology Conference in December 2023. This idea of a competitive edge in liquid cooling has been echoed in sell-side reports, including reports issued by Barclays and JP Morgan.[17]

Super Micro has also told investors that it wants to increase production capacity of its liquid cooling solutions, per its prospectus and Q2 2024 investor presentation. Super Micro’s CFO estimated that by June 2024, it will “have a rack capacity of 5,000 racks per month” and “liquid-cooled rack capacity of 2,000 racks per month”. (Q3 2024 earnings call)

CEO Charles Liang further stated on Super Micro’s Q2 2024 results call “we are beating the industry” on liquid cooling and in June 2024 suggested Super Micro would “revolutionize the industry”. [18]

Given the claimed groundbreaking nature of the company’s technology, investors would want to know any related parties it was working with to “revolutionize the industry”.

On its relationship with Ablecom, its key related party supplier, Super Micro makes no mention of its designs or innovation in liquid cooling technology.[19]

Yet patent and utility model records show that Ablecom has 2 patents for water cooling and 1 utility model, accepted between 2022-2024. [1, 2, 3]

A former employee of Ablecom also stated that Super Micro was showcasing Ablecom’s liquid cooling solutions at the 2022 SuperComputing Conference in Dallas, per their LinkedIn.

At another 2024 conference, Ablecom listed its “liquid cooling system” under its product offering.

In short, Super Micro’s related party “contract manufacturer” to whom it outsources basic component manufacturing and assembly might also be designing its liquid-cooling solutions, which are being touted as proprietary.

As a matter of transparency, we think Super Micro should disclose the role of its related parties in the development of the product.

Part III: Undisclosed Related Party Transactions

Entity Records Show Super Micro CEO’s Youngest Brother, James Liang, Owns Two Taiwanese Entities That Also Make Server Components

Both Operate Out Of The Super Micro Science And Technology Park But Super Micro Has Never Disclosed Any Related Party Transactions With These Entities

In addition to Super Micro CEO Charles Liang’s two brothers mentioned above, which run the disclosed related parties named in the previous section, Liang’s third and youngest brother, James (Jianguo) Liang, also operates two Taiwan-based companies, per Taiwanese corporate records. These appear to be undisclosed suppliers of Super Micro.

James (Jianguo) Liang owns 85.7% of the shares of Aeon Lighting Technology, founded originally as an LED lighting manufacturer in 2007, per Taiwanese corporate records and one of the company´s associated websites.[20]

He also owns 99% of Aeon Biotech (弘國生物科技股份有限公司 or “Hongguo Biotechnology Co.”), a company established in August 2020 originally to manufacture sterilization equipment during the coronavirus pandemic, per Taiwanese corporate records and its corporate website. [Pg. 3] [21]

In addition to producing LED lighting, Aeon Lighting Technology also produces computer components and, on another of its associated websites, specifically lists chassis manufacturing, rail sliders, cooling systems, power supplies and metal prototyping as its product offerings.

Its company brochure prominently displays a Super Micro branded workstation chassis. [Pg. 17]

Its latest ‘news’ section contains a number of updates in which Aeon describes itself as “a leading global provider of artificial intelligence solutions” and also details launches of server cooling products, and a press release that announced strategic partnerships with unnamed server companies.

Not only is Aeon Lighting in the server business, like Super Micro, Compuware and Ablecom, it also operates from the same location.

Aeon’s website also lists a job posting for a production role, located at “No. 306, Chang’an Street, Bade District, Taoyuan City” in Taiwan, the same address as Ablecom and Compuware’s manufacturing facility, within the industrial campus it shares with Super Micro.[22] (See Appendix I)

James Liang´s second company Aeon Biotech (also known in Chinese as “Hongguo Biotechnology Co.”) seems to have pivoted from sterilization equipment to the server business.[23] 

A profile on leading Taiwanese job listing website 104 states that Aeon Biotech is “providing the most complete AI server design, research and development, and sales”, per translations of the listing from  Chinese. 

The profile also states the company is located within the “Supermicro AI Technology Park”. At least 15 other Aeon Biotech listings for jobs ranging from “sheet metal business specialist” to “process assistant” show the same address. [1, 2, 3, 4 , 5, 6, 7, 8, 9, 10, 11, 11, 12, 13, 14, 15]

Former Employees Of Super Micro Said That Aeon Was A Supplier To Super Micro And Discussed Other Related Party Dealings

Super Micro makes no disclosure of related party transactions, products received, and the costs of said products with any Aeon entity in its public filings.

Despite the younger brother owning the vast majority of each entity, Ablecom´s website lists Aeon Lighting as part of the Ablecom Group without giving specific details of the relationship.

A former Super Micro employee, as well as media reports, indicate that Aeon is a supplier to Super Micro.

The translation of a 2024 interview stated that all three brothers “followed him [Charles Liang] into the electronics industry and became Supermicro’s supplier.” [24]

A former Super Micro sales director expressed that Aeon was part of Super Micro´s supply chain:

Hindenburg Researcher: “Aeon…Don’t know if it rings any bells?”
Former Employee: “Yeah, that’s another one [supplier]”

Summarizing the situation, the former sales director told us that the circular nature of the related parties deserved to be scrutinized by investors:

“If you’re really looking at this from a finance standpoint is, what is the money flowing from America into Taiwan and back out and where does that money park? [Are] their profit numbers really real or is he [Charles Liang] really profiting off of every segment within the chain? Which is what I think he’s doing.”

Suggesting that related party suppliers had been a perennial issue which had not been called into question, they said:

“I mean, to be really honest with you, that’s always been a problem for 30 years. He’s had these suppliers. Nobody’s questioned it.”

Entity Records Also Show That Bill Liang, A Brother Of Super Micro’s CEO, Is A Director And Shareholder Of A Similarly Named Hong Kong And Taiwanese Entity, Called Ablestnet

Ablestnet Appears To Resell Super Micro Products And Provide “Professional OEM Services”

It Operates Out Of The Same Factory As The Related Party Compuware

Super Micro CEO Charles Liang’s other brother, Bill (Jianda) Liang, who runs a disclosed related party, Compuware, named in the previous part, is a shareholder and director of another Hong Kong entity called “Ablestnet Technology Limited”, per its 2023 Annual Return.[25]

Bill Liang is also the Chairman and 17% shareholder of another similarly-named entity in Taiwan called “Ablestnet Computer Inc” – which itself holds a 9.34% stake in Compuware, per shareholdings disclosed in filings by one of Compuware’s investee companies. [Pg. 18] [26]

Both the Ablestnet Taiwan and Hong Kong entities appear to be undisclosed related-party suppliers or resellers for Super Micro.

A company profile for Ablestnet on a leading Taiwanese job site states that the company is providing “OEM services for electronic product assembly, testing, packaging and maintenance”, per the English translation. It also states the company has 100 employees. 

Ablestnet products are displayed online at distributors like Server Bank which describes itself as a Chinese IT equipment distributor, per its website. The chassis used in many of these advertised Ablestnet products is identical to Super Micro. For example, the 3U Rackmount Server advertised even uses an identical stock image.

Marketing material for Ablestnet also shows it is operating at the same building as the related party, Compuware, mentioned above. Both are located at No. 230 Liancheng Road, Zhonghe District, New Taipei City.

Despite selling almost identical products, offering OEM services and being located at the site of a related party, Compuware, neither Ablestnet’s Taiwanese or Hong Kong entities are mentioned in Super Micro’s filings.

In February 2024, Super Micro Made An Undisclosed Investment In Tech Startup Lambda Labs As Part Of Its $320 Million Funding Round

Lambda’s CEO Publicly Claimed One Purpose Of Its Funding Was To Buy “Lots Of Nvidia GPUs”

But A Former Lambda Leader Told Us “I’ve Never Heard Of Them [Lambda] Using Anyone Else But Super Micro”

 Lambda Labs is a tech company “known for selling physical computers which come with physical GPU cards”, according to Paperspace. In February 2024, the company raised a $320 million funding round, with Super Micro participating in the financing, per Bloomberg.

Super Micro’s financial statements contain no reference to any investment into Lambda Labs as part of the fund raising.[27] Lambda’s own announcement on the investment round made no reference to Super Micro either.

Lambda COO Mitesh Agrawal told us via email that Bloomberg’s reporting is accurate but would not share the investment size.

While announcing the fundraise, Lambda’s CEO, Stephen Balaban, said the company would need “lots of Nvidia GPUs” to accomplish its goal of becoming the “#1 AI compute platform in the world.”

As one former business head at Lambda told us, Super Micro was Lambda’s hardware backbone for these Nvidia GPUs:

“I’ve never heard of them [Lambda] using anyone else but Super Micro.”

Lambda’s support pages show the role of Super Micro hardware, listing user manuals for 10 Super Micro models, along with Gigabyte, a Taiwanese manufacturer.

Later, in June 2024, Super Micro announced a $600 million datacenter sublet arrangement with Lambda, the first public deal of its kind, per an industry media outlet that characterized it as “unusual”.

Super Micro CFO David Weigand gave no clear answer when questioned about the deal on an August 6^th, 2024, earnings call, saying:

“So we consider ourselves experts in datacenter solutions. And so this is really just one more facet of being a total provider.”

In short, Lambda seems to have purchased hardware and datacenter space through Super Micro, without disclosure of the potential related party nature of the deal owing to a Super Micro investment.

We think Super Micro should disclose any investment in Lambda and the details of any revenue arrangements between the two.

On October 25^th, 2023 Two Related Parties Run By CEO Liang’s Brothers, One Of Them Partially Owned By Super Micro’s CEO, Reportedly Invested In Leadtek

Leadtek’s Website Advertises Server Products That Appear Identical To Super Micro’s Offerings, Indicating A Reseller Arrangement

Leadtek Research (2465 TT) is a listed small-cap Taiwanese company, which distributes and manufactures technology products, including servers, per its website and investor presentation. The company derives about 70-80% of its revenue from China, according to the company’s Chairman.

Super Micro has made no reference to Leadtek in any of its financial statements or press releases.

On October 25^th, 2023,Compuware Technology, a related party of Super Micro, run by Charles Liang’s brother disclosed that it had “joined forces with Super Micro and Ablecom to invest in Leadtek”, per its English press release.

The Super Micro investment apparently never happened. Instead, the related parties stepped into the role. Leadtek company documents show a private placement of NT 669 million (~$20 million) issued on November 21st, 2023. [Pgs. 12-13] The shares were issued to Compuware (33.3%) and Ablecom Technology (66.6%), run by two of Super Micro CEO’s brothers. Super Micro’s CEO also has a 10.5% stake in Ablecom along with his wife.

At an investor day in December 2023, Leadtek’s CEO said that Super Micro had apparently not invested because of U.S. regulation, but stressed the long-standing relationship with Super Micro. [28:30]

Ablecom and Compuware now own 19.85% and 9.93% of Leadtek, according to Leadtek corporate filings in April 2024. That makes Ablecom and Compuware the largest individual shareholders of the company as no other shareholder holds more than 5%, per Leadtek.

Both of Charles Liang’s brothers later took board seats at Leadtek, on December 27^th, 2023, per Leadtek filings. [Pg. 17]

Super Micro makes no reference to any transactions with Leadtek, despite advertising almost identical products, utilizing Super Micro parts on its website.[28] We reached out to Leadtek’s investor relations spokesperson, Michael Yang, to understand more about the relationship. He confirmed that Leadtek was using parts from Super Micro:

“We will take their [Super Micro’s] motherboard then take Ablecom’s case then Compuware’s power supply”. [Translation of Chinese]

The Leadtek spokesperson went on to say there was even a “tacit understanding of cooperation” with Super Micro for an investment into Leadtek:

“The three brothers [Charles, Steve & Bill Liang], our Chairman knows them all. There is some tacit understanding of cooperation, so they hope to invest in Leadtek, because we have been working on it for a long time.” [Translation of Chinese]

Given the circular nature of their relationship, the indirect ownership by Charles Liang andthe close ties to Super Micro, this appears to be a de facto, undisclosed related party.

Part IV: Major Product Issues, Poor After-Sales Service, And Mounting Competition Are Driving Key Customers To Leave Super Micro

Competitive Threats Have Emerged From Large Technology Companies Like Dell, Putting Super Micro At Risk With Its Largest Customers

May 2024: “Nobody is Better At Building End-To-End Systems Of Very Large Scale For The Enterprise Than Dell.” – Jensen Huang, Nvidia CEO, Key Partner And Chip Supplier To Super Micro

As with nearly all large-scale technology businesses, customer and partner referrals or recommendations are vital to driving revenue.

In Super Micro’s core U.S and European markets, which account for 71% of revenue, we found a slew of large, dissatisfied customers who had moved business away from Super Micro.

At the same time, competitive threats have emerged from major technology companies like Dell who have a long track record in serving the enterprise market. As Jensen Huang, CEO of Nvidia, Super Micro’s largest supplier and partner, said just months ago:

“Nobody is better at building end-to-end systems of very large scale for the enterprise than Dell.” (GTC Conference, March 2024, reported by Bloomberg)

Up until now, Super Micro’s early entry into the AI server market had given it an initial lead, but as a Lenovo executive we interviewed highlighted, late entrants (like Dell or Lenovo) are poised to take share:

“Now that they’ve [Super Micro] got competition, I think what you’re seeing is the likely outcome of a lot of these deals that when customers have actual choice, they’re going to go to a company that’s going to actually provide proper support, proper service.”

As a result, its pricing power has deteriorated. In the most recent Q4 2024, Super Micro increased revenue by 38% quarter over quarter, but its cost of goods sold increased by 45% over the same period. This indicates that despite a rapid increase in demand, Super Micro was unable to pass the costs on to its customers.[29] [1,2,3,4,5]

#1 Customer: Super Micro’s Largest Customer Over The Last Year Is CoreWeave, Per Bloomberg Intelligence

In December 2023, Dell Announced A Deal From CoreWeave For “Thousands” Of GPU Servers, Potentially Worth Over $1 Billion

CoreWeave is a cloud infrastructure startup, backed by Nvidia, that offers high performance computing/GPU solutions that customers can rent.

Over the past year to Q3 2024, CoreWeave has been Super Micro’s largest customer, accounting for approximately 22% of revenue or around $2.6 billion, per Bloomberg Intelligence.

In December 2023, Dell for the first time announced an AI deal with CoreWeave, in which CoreWeave had agreed to purchase “thousands of servers” to help organizations with AI workloads.

As a result, it appears Super Micro has lost share with one of its largest accounts.

#2 Customer: In September 2023, Super Micro Was The Exclusive Server Supplier to Tesla, Per Barclays Research

Recent Reports In May 2024 Show Dell Has Now Won Major Deals From Tesla, Eroding Super Micro’s Exclusivity

Elon Musk Has Said xAI Will Be Splitting Business Between The Two Companies, Further Suggesting A Loss Of Exclusivity With Musk Entities

Tesla, like CoreWeave, is one of Super Micro’s largest customers.[30] In September 2023, Barclays research suggested that Super Micro had an exclusive relationship with Tesla for AI servers.

Eight months later, in May 2024, media reports, citing an Evercore Research report stated that “Dell has won a large portion of business for Tesla’s (TSLA) AI Server buildout” and allocations are “heavily skewing” towards Dell, effectively eroding Super Micro’s exclusivity with Tesla.

Separately, Elon Musk announced through a series of posts on ‘X’ that his startup xAI would also be splitting its business 50/50 between Dell and Super Micro. [1,2]

#3 Customer: Super Micro Has Told Investors That It Is “Under-Indexed” (i.e., Does Less Business) With The World’s Largest Technology Companies Called “Hyper Scalers”

What It Hasn’t Mentioned: Its Failed Relationship With Amazon

“They Were The First Partner To AWS. A Lot Of People Don’t Know That They Were Building The AWS Clusters Until He [Charles Liang] Pissed Off Jeff Bezos And Deliveries Didn’t Go And They Got Thrown Out Of There…” – Former Super Micro Sales Director

Amazon AWS is not only one of the largest cloud providers in the world, but is also one of the largest buyers of advanced Nvidia chips and providers of high performance/AI related services. In 2023, it was estimated that Amazon was tied for 3^rd largest purchaser of H100/H800 chips from Nvidia, per The Information, a technology focused business publication.

In January 2024, Super Micro’s Vice President of Corporate Development, Michael Staiger, told investors that Super Micro was “under-indexed” (meaning it does less business) with hyper-scale customers, or large cloud service providers such as AWS, Microsoft and Google.

Former employees we interviewed told us that Super Micro’s early relationship with AWS for high performance clusters had soured. One sales director told us:

“They were the first partner to AWS. A lot of people don’t know that they were building the AWS clusters until he [Charles Liang] pissed off Jeff Bezos and deliveries didn’t go and they got thrown out of there, but they were the entry customer.”

Another senior salesperson added:

“[AWS] was definitely one of their early, larger rack scale opportunities. That was pretty massive, I believe. And they just saw it because, largely because Super Micro was in the infancy of that business, but also because they just don’t have processes and controls to have root, they don’t have a root cause corrective action process to continually make things better. They just don’t.”

Finally, a third business development director added:

“Let me just say that particular account [AWS], you know, was not a good example or actually it was a very good example of what not to do.” 

#4 Customer: In 2023, Digital Ocean, A US Cloud Service Provider, Moved Away From Super Micro To Dell After Service Issues, According To A Current Employee Of Digital Ocean

“That Was A Train Wreck Of Sorts. They [Super Micro] Had Pretty Bad Reliability And You Just Couldn’t Pinpoint Like What Was Going On. Something Keeps Going Wrong,” They Told Us

Digital Ocean is an American cloud service provider, headquartered in New York.

Initially we were told that Digital Ocean had made a small test order from Super Micro around 2023, with a view to ordering 100 servers, per a current leader at the firm.

“What could be given because our actual order is we are talking about [a] hundred. So the ten is just the first.”

Commenting on the experience, the Digital Ocean leader told us:

“That was a train wreck of sorts. They [Super Micro] had pretty bad reliability and you just couldn’t pinpoint like what was going on. Something keeps going wrong. Took a long time and, as you can imagine, a lot of frustration on many sides.”

In the end, after service issues, Digital Ocean switched the larger part of its order to Dell:

“They [Dell] figured out that this is an opportunity and 90% of the [total server] order has not been done yet.…We definitely found that Dell was a way more willing partner in terms of ‘we will make sure you get the service delivered.’”

In short, Super Micro seems to have lost a large deal on the back of poor after-sales service.

#5 Customer: Super Micro Lists Its 2023 Deal With Genesis Cloud As A “Success Story” On Its Website

Current And Former Genesis Employees: “Catastrophic. It Is, On The Technical Side, One Of My Worst Experiences I’ve Had…In The Industry.”

“On The Whole We Had About A 10% Failure Rate And That Was Down At A Hardware Level And A Firmware Level Issue.”

Genesis Cloud is one of Europe’s largest GPU Cloud providers, per our conversations with industry experts, and is described as a “leader in offering high performance servers”, by Super Micro.[31]

Super Micro declares its 2023 deal with Genesis a “success story” according to its website. As part of the deal, Super Micro says it provided its systems to run both Intel processors and Nvidia GPUs.[32]

When we asked one former employee their experience of the Super Micro deal, they said:

“Catastrophic. It is, on the technical side, one of my worst experiences I’ve had…in the industry.”

A current employee explained the issues with the Super Micro servers Genesis bought:

“We had about a 10% failure rate and that was down at a hardware level and a firmware level issue.”

On the firmware side, they added:

“We encountered a bug that nearly lost us a customer that had been known for about nine months that simply wasn’t communicated to us [by Super Micro]…”

When asked on the way forward:

“We are evaluating Dell and Lenovo specifically. Those are two that we’re absolutely evaluating”.

We estimate Genesis could potentially be one of Super Micro’s largest European deals. Far from being a “success story”, it appears to be a deal riddled with issues.[33]

#6 Customer: GMI Cloud Is A GPU Cloud Provider, Founded In 2023, “Serving Top AI Customers In US and Asia”

An Employee At GMI Cloud Cited A Problem Rate Of 17.5% On Its Orders Of 256 Servers From Super Micro 

GMI Is Now Moving Away From Super Micro To HPE, Less Than A Year After Its First Order, Per The Employee

GMI Cloud is an Asia and US focused cloud provider startup, “serving top AI customers in US and Asia” per the founder and CEO’s LinkedIn. The company was founded in 2023 and discloses Super Micro as its GPU server partner on its website.

We spoke to a current employee who told us that while Super Micro had a lower cost per unit than competitors like Dell and HP, there were many problems along the way:

“I think what you’re not calculating is all the soft costs that you have for having to kind of go through, your cost savings of what you think you’re getting quickly becomes a deficit when you have all these problems that come up and time to revenue because, you know, obviously we can’t bill clients when they can only use six out of eight [GPU] cards in a box.”

Out of a total order of ~256 GPU servers from Super Micro, estimated to cost $60-80 million, they told us the problem rate was around 17.5%: [34]

“Out of the 256, I’d say 45 servers out of the 256 had issues.”

They further went on to say even more basic parts like the Network Interface Controller (NIC) had failures right out the box:

“In the last six months, probably like 13 servers had NIC card problems, right out of the thing.”

As a result of the issues and time to resolution, they said GMI was moving away from Super Micro:

“Our next two orders that we placed in the US are with HPE.”

#7 Customer: In October 2023, NexGen Cloud, A Nvidia Partner, Disclosed It Was Investing $1 Billion To Build An AI Super Cloud In Europe With Over 20,000 Nvidia GPUs

A NexGen Employee Told Us That Sometimes Up To Half Of Super Micro Orders Had Firmware Issues

NexGen Cloud is a UK based European leader in sustainable AI cloud infrastructure, per its website. In September 2023, it confirmed it will “invest $1 billion to build its AI Supercloud in Europe”, which would “eventually consist of more than 20,000 NVIDIA H100 Tensor Core GPUs”, per Capacity, a technology publication.

Up until recently, the company had used a mix of Asus, Super Micro, and Dell servers for GPU compute, per a NexGen Cloud employee.

The employee explained that firmware was a constant issue with Super Micro servers and support around this was “challenging”:

“The more challenging thing is firmware related issues. I can’t go and find a support document with a firmware matrix that says this is the compatible versions, which is exactly what you get from Dell or HP or even Gigabyte…Whereas Super Micro you just kind of send it off and it comes back in Chinese”

Illustrating this practically, on initial orders, they explained that half of the machines in an order might have mismatched or wrong firmware:

“And out of the 20 machines we’d received from Super Micro, ten of them might have the right firmware, and ten of them might have the wrong firmware. Or ten NICs [Network Cards] would have a different firmware to the other one, which would manifest this weird slow booting thing or whatever.”

The employee said, after this experience, that they were trying to push all business to what they called “tier 1 providers” like HP and Dell.

Hindenburg Researcher: “Then why wouldn’t you just push everything into the tier ones like HP and Dell?“

NexGen Employee: “Yeah, exactly.“

Hindenburg Researcher: “You mean you would basically?“

NexGen Employee: “Yeah, I would, yeah. I very much drive that internally.“

Ten Former Employees Confirmed That After-Sales Services Was Harming Super Micro’s Ability To Retain Customers

“It’s Their Achilles Heel. It´s Just Horrible. Salespeople Hated To Sell Any Of Their On-Site Services.” – Senior Sales Director

On Super Micro’s Q2 2020 earnings call, when asked how large its global support staff was, management didn’t share a number.

Throughout our conversations with customers, distributors and former Super Micro employees, it became clear that after-sales support and service was vital for many startup and enterprise customers, given the complexity of workloads they were running.

However, at least 10 former Super Micro employees told us that Super Micro was consistently let down by its after sales and support. As one senior salesperson concluded:

“It’s their Achilles heel. It´s just horrible. Salespeople hated to sell any of their on-site services. The service salespeople hated to sell any of their support. Just awful. It always came back to bite them just in terms of if they sold a certain SLA, service level agreement. Super Micro would never meet it.”

One sales director who left around 2021 told us the services team was small relative to the type of business it was supposed to support:

“Their service center sucks. They’re terrible. I mean, the whole of the post support service team. This is for a company that does 5.5 billion in a quarter, right? The whole of the post-support team is 20 people in the US.”

A CTO of a Super Micro customer in Europe told us on their experience in 2023 and 2024:

“It’s basically devolved down to the stage where Super Micro effectively have, I would say, one field engineer or specialist for GPU servers in all of EMEA. That’s the insane thing. He’s got one other guy helping him though, but he effectively at that point in time was a one man show.”

Part V: Evading Sanctions And Export Restrictions

Background: In 2006, Super Micro Pleaded Guilty To A Felony Count Of Export Ban Evasion

Its Current CEO Told The New York Times In 2008: “We Were A New Company And Didn’t Know Every Regulation. Now, We Are Well Trained And Watch Over This 24 Hours A Day.”

In 2006, before Super Micro was listed, it pleaded guilty to one felony count of exporting computer components to Iran in 2001 and 2002 in violation of U.S. export bans. It was fined $150,000.

CEO Charles Liang was quoted by the New York Times blaming the crime on inexperience:

“We were a new company and didn’t know every regulation. Now, we are well trained and watch over this 24 hours a day.”

Based on our analysis of import-export records and other source material, strategic Super Micro components may once again be evading U.S. export restrictions.

Super Micro publishes an export control policy on its website but, as of mid-August 2024, had not updated the document since 2020 despite fast-changing regulations. It includes neither Russia nor China in the list of countries currently under U.S. sanctions or heightened scrutiny.[35]

The policy recognizes that “non-compliance with U.S. export control laws may result in substantial administrative, civil and criminal penalties against Supermicro and/or individual employees.”

The policy also states its employees will receive export compliance training and that Super Micro will perform “red flag screening” on its clients and training about potential export restrictions.

We do not believe that Super Micro adequately performed its own internal screening procedures, let alone others required by U.S. government agencies.

The U.S. Has Imposed Stringent Controls And Bans On Exports To Russia Of High-Performance Computers And Components Since The Invasion Of Ukraine

Super Micro Says It Has “Not Recorded Revenue” From Russia Since The Day Before The War Started

But Super Micro Exports To Russia Have Spiked More Than 3x Since The Invasion Of Ukraine In Apparent Contravention Of The Bans

Since Russia invaded Ukraine on February 24^th, 2022, the U.S has imposed increasingly stringent export controls on U.S. goods and technology, including foreign items produced with U.S. know-how and machinery, in an effort to undermine Russia´s “aggressive military capabilities”.[36]

Export restrictions are mandated by U.S. Export Administration Regulations (EAR) which include a Commerce Control List (CCL) of approximately 3,000 items that currently require an export license, including computers, computer assemblies, chips, switching devices, electronic components and microprocessors.[37]

Regulations indicate that applications to export most components on that list to Russia will generally be denied – effectively establishing an export ban. [Section 746.5]

Super Micro has disclosed that its products are subject to U.S. trade bans and said it had entirely halted sales to Russia and had not recorded revenue from Russia since February 23, 2023 – the day prior to the invasion.[38]

But Super Micro products have been shipped to Russia in larger-than-ever volumes since the invasion of Ukraine, based on our analysis of more than 45,000 import and export transactions provided by trade aggregator Tradesparq.[39] [40]

U.S. government agencies, including the Department of Commerce´s Bureau of Industry and Security, have issued repeated warnings about red flags indicating controlled goods may be getting illicitly diverted to Russia.[41] [42]

Prior to the war, between January 1^st, 2020, and February 23^rd, 2022 – the last date Super Micro said it booked revenue for Russia sales – $60.7 million of Super Micro products were exported to Russia either directly by Super Micro or by third-party exporters, per available Tradesparq data.[43]

After the invasion of Ukraine, between February 24^th, 2022, and to June 30^th, 2024- the end of Super Micro’s fiscal year – the export of Super Micro products to Russia spiked. Approximately $210 million of Super Micro products were shipped to Russia in that period – in apparent contravention of U.S. export bans – per Tradesparq.

Super Micro appears to have ceased direct exports, as disclosed. However, 10 third-party exporters handled two-thirds of the shipments to Russia and more than 220 other entities – 3x more than pre-invasion – handled the remainder, per Tradesparq. The largest exporters were based in Turkey, China and the UAE – all transshipment countries identified by the U.S. government.[44]

The export values are based on declared customs value. The actual revenue generated for Super Micro or intermediaries may have been multiples higher, given that technology prices in Russia are being boosted by scarcity amid heavy sanctions and price gouging via black-market supply routes, per NATO.[45]

Super Micro said in its 2023 filings that the impact of U.S. export bans was unlikely to be material and said sales to Russia and Belarus had not been material prior to the invasion.[46]

In calendar year 2023, exports of Super Micro products to Russia rose to $126.6 million – 9.6x higher than in 2021 – per Tradesparq data. That value was equivalent to 4.9% of Super Micro´s total worldwide sales, excluding the U.S., in calendar 2023, per filings. [1, 2, 3, 4] [47]

The actual result as a percentage of worldwide sales may be much higher given that trade data shows the declared customs value, not the actual value of revenue derived from wartime Russia.

The U.S. Government Has Repeatedly Warned Companies To Step Up Export Compliance Efforts To Prevent Goods Being Illegally Smuggled To Russia

Many Of The Red Flags Government Agencies Have Raised Closely Reflect The Pattern Of Super Micro Exports

Super Micro Appears To Have Paid No Heed To Publicly Visible Warning Signs Or The Company’s Own Screening Policy

The U.S. Bureau of Industry and Security (“BIS”) has specifically advised multinational companies to step up due diligence and export compliance efforts, following Russia’s invasion of Ukraine. [Pg. 4]

The BIS has warned companies to scrutinize export orders from new customers, to be on the lookout for an increase in orders of certain components, and to check that larger orders of controlled items are not broken down into smaller shipments to avoid detection.[48] [Pg. 5]

It has also published a list of countries that may be used as transshipment points for restricted items en route to Russia, including Taiwan, Kazakhstan, China, Turkey and the United Arab Emirates. [Pg.7]

These are all fact patterns that we have observed regarding the export of Super Micro parts to Russia, based on our analysis of Tradesparq data.

Given repeated warnings by the U.S. and other coalition governments, we would expect Super Micro – a company with significant international trade and a track-record of non-compliance – to be hyper attentive to U.S. government guidance. This is especially so given the company’s own policy stating it will perform “red flag screening” on its clients.

Clearly a large spike in the value of exports to Russia during a major geopolitical event, combined with a slew of new intermediaries in high-risk countries, should have prompted reflection.

Instead, it appears Super Micro has simply ridden the wave of rising demand for its products in Russia.

At Least 46 Companies That Handled Super Micro Products To Russia Are Now Under OFAC Sanctions Or On U.S. Government Watchlists

Office of Foreign Assets Control (“OFAC”) sanctions are part of a package of national emergency measures to hamper the “technology sector or the defense and related materiel sector of the Russian Federation economy”. Others have been designed to combat Russian cyber-attacks and meddling in U.S. elections.[49]

That means that U.S. companies cannot provide any goods, services or otherwise engage in business with sanctioned entities nor receive payment from them.

Since the invasion of Ukraine in February 2022, a web of at least 235 exporters and 185 importers have been shipping Super Micro parts into Russia, per Tradesparq data.

At least 17 of those exporters are currently subject to U.S. Treasury Department OFAC blocking sanctions.[50] And at least 17 of the importers in that period are also currently sanctioned by OFAC.[51]

Another 11 exporters of Super Micro products to Russia after the invasion, listed by Tradesparq, currently feature on the U.S. Bureau of Industry and Security´s (BIS) so-called “parties of concern” or entity list.[52] [53] Additionally, at least one of the importer entities are listed on the BIS entity list. [54]

That list, included in the U.S. government´s consolidated screening list, comprises individuals and entities engaged in sanctioned activities and/or actions “contrary to U.S. national security and/or foreign policy interests”.

Of the overall total, the 28 exporters now on sanctions lists or watchlists appear to have exported about $44.5 million of Super Micro products to Russia since its invasion of Ukraine, per Tradesparq data.

The 18 importers on those sanctions and watchlists, have handled about $80.5 million of imports of Super Micro products since the invasion of Ukraine.

While only 3 of the exporters and 6 of the importers appear to have handled Super Micro goods even after they were sanctioned or watchlisted, the products they were shipping to Russia were already subject to stringent export controls – tantamount to an export ban – after February 24^th, 2022.

Their role in shipping goods in contravention of trade restrictions – sanctions busting – would have contributed to their inclusion on U.S. government lists.

Almost 2/3 Of Super Micro Exports To Russia Since The February 2022 Invasion Correspond To “High Priority” Components That The Russian Military May Be Diverting To The Battlefield, Per U.S. Government Warnings

In February 2024, the U.S. Bureau of Industry and Security issued additional clarification and a so-called Common High Priority List of 50 high-priority components, and their corresponding Harmonized System (“HS”) Codes, that are banned from export to Russia, stating: [55]

“While BIS’s controls cover a vast array of items necessary to fuel Russia’s war machine, certain items are more significant to Russian weaponry than others.”

Based on our analysis of available Tradesparq data, 62.8% – or $131.9 million – of Super Micro exports to Russia since the invasion of Ukraine until June 30^th, 2024, correspond to HS prefix 8471.50. This is one of the codes listed on the Bureau´s “common high priority list”  (CHPL), which is broadly described as processing units such as “storage units, input units, [and] output units”. [56] [57]

One Of The Biggest Importers Of Super Micro Products Is A Supplier To One Of Russia´s Largest “Super Computers” At A Once-Secret, Now Sanctioned Research Center

It Has Received At Least $46.3 Million Of Super Micro Products Since The Start Of The Russia-Ukraine War, Per Tradesparq Data

Moscow-based Niagara Computers has been a longstanding distributor of Super Micro products judging by certificates dating from 1999, 2002, 2004 and 2007 posted on its website.

After the invasion of Ukraine, Niagara became the single largest importer of Super Micro products to Russia, receiving $46.3 million – or 22% of the total – between June 2022 and December 2023, per Tradesparq.[58]

Niagara Computers – not currently on U.S. sanctions lists – states that one of the stand-out projects it is involved in is “one of the most powerful supercomputers in Russia” at the formerly secret  Kurchatov Institute.

That facility is a Russian state organization that leads research and development in nuclear energy – including nuclear weapons – aviation materials, electronics and computer science, per its website. 

The institute has been on the U.S. Bureau of Industry and Security watchlist since September 2022. Its aviation materials research unit has been under OFAC blocking sanctions since March 2022 while its structural materials research unit has been under OFAC sanctions since December 2022.

Super Micro Appears To Have Continued Supplying Longstanding Customer Niagara Computers Via An “Insanely Intimate” Distributor In California

The CEO Of The California Company And The Russian Entity Is The Same Person

We believe that all the common-sense indicators suggest that Super Micro continued to knowingly supply one of its longstanding Russian customers first via a California distributor operated by a key executive of one of its authorized partners and later via a web of Turkish shell companies.

Trade data shows Super Micro exporting goods directly to Niagara until February 24^th, 2022, the day Russia invaded Ukraine.

Then between July 12^th, 2022 and February 8^th 2023, a California entity named Business Development International took over exports of Super Micro products to Niagara – in apparent contravention of U.S. trade restrictions – per import-export data.

In just a little more than 6 months, Business Development International shipped more than $5.8 million of “computing machine devices”, “data processing blocks” and “parts and accessories” solely to Niagara Computers in Russia, per Tradesparq.

Of those exports, 94.9% correspond to the HS prefix 8471.50 – one of the codes later specifically listed on the U.S. Bureau of Industry and Security´s “common high priority list”  (CHPL) of items that Russia has been procuring for battlefield use.

It appears Business Development International, or at least its key executives were clearly well-known to Super Micro, as were their commercial ties with Russia.

The company’s local office was less than 2 miles from Super Micro´s headquarters.[59]

The CEO of Business Development International is named as Dmitri Garanov. A search of his Idaho address via public records aggregator Lexis Nexis lists his initial as Dmitri N. Garanov.

Dmitri Nikolaievich Garanov is also the full name of the chairman and majority shareholder of Niagara Computers in Moscow, per Russian corporate registry data. Effectively, Super Micro appears to be selling components directly to its longstanding Russian customer via a California front company run by the same CEO.

Business Development International’s CFO, Mariya Zevelyov had also held the same position at Viatech International Trade Corporation, which was incorporated in 1997 and was still listed as an authorized partner for the Ukraine and Kazakhstan markets on Super Micro’s website as of August 2024.[60] 

An archived version of the Viatech website from 2018 shows the entity was a distributor for Super Micro and includes information in Russian in which it says it has “accumulated vast experience in logistics, especially with the CIS countries”.

On its website, Viatech boasted of its proximity to Super Micro and their “almost insanely intimate” business relationship.

We reached CFO Zevelyov by phone and she confirmed she had known Dmitri Garanov since the mid-1990s and that he was both CEO of Business Development International in California and president and owner of Niagara Computers in Russia.

When asked about exports of Super Micro components to Russia following the invasion of Ukraine, she responded:

“I don’t know. Can you ask Dmitri [Garanov] because I am not aware what he was doing.”

When asked about her role as CFO at Business Development International she responded:

“I just helped, nothing. I just help him [Dmitri Garanov] sometimes. If he asked me to transfer money. Yes, I help him. Like accountant.”

As The California Distributor Wound Down Exports, 3 Newly-Created Turkish Shell Entities Then Took Over Shipments To Niagara Computers

Just as California-based Business Development International’s export operations were winding down, three recently-created Turkish companies took over shipping Super Micro products to Niagara.

The largest, Koc Gemicilik Ve Tasimacilik, was incorporated on January 11^th 2022 – about five weeks before Russia invaded Ukraine, per the Turkish corporate gazette.[61]

The company only has a basic website in English, Russian and Turkish and vaguely introduces itself as the “largest Turkish company providing various types of services and facilities”. [62] [63]

Between March 6^th 2023 and December 21^st 2023, Koc Gemicilik Ve Tasimacilik exported $32.1 million of Super Micro products solely to Niagara in Russia, per Tradesparq.[64]

In June 2024, Koc Gemicilik Ve Tasimacilik was placed under U.S. sanctions for its role in smuggling restricted items to Russia.

The other two export intermediaries, Alfament Yazilim Teknoloji and AMD Ithalat Ihracat were both incorporated in Turkey within two months of the Russian invasion of Ukraine, per the Turkish corporate gazette.

Neither entity nor their sole shareholders appear to have any significant online presence.

Between January 2023 and October 2023, those two entities shipped a combined $8.3 million of Super Micro components to Niagara, per Tradesparq. The vast majority of those products corresponded to HS trade prefix 8471.50 – items the U.S. says are being diverted for military use.

Newly-created Turkish entities, run by Ukrainian and Russian citizens, with little or no trading history and little or no online presence would have been an unmissable warning sign during even the most rudimentary due diligence and export compliance checks.

One Of Super Micro´s “Authorized Partners” Has Exported More Than $10.25 Million Of Super Micro Components To Russia Since The War

Its Largest Russian Customer – Who Advertises Itself As A Super Micro Partner – Supplies The Russian Secret Police, A Naval Guidance Systems And Electronics Research Center And The Orlan-10 Drone Maker

Under its partnership program, Super Micro provides basic and monthly training, permits co-branding and offers co-op marketing funds to “trusted” distributors and resellers globally.

Super Micro lists IT distributor Beiliande as an “authorized partner” in the “where to buy” section of its main website.[65]

Between November 2^nd, 2022 and November 14^th, 2023, Beiliande exported Super Micro products with a declared customs value of approximately $10.25 million to Russia – via both its Shenzhen and Hong Kong operations, per Tradesparq.

The largest single Russian customer supplied by Beiliande was called Asilan, based in St Petersburg, which received goods with a declared customs value of about $3.6 million, per Tradesparq.[66]

Asilan´s website provides a list of 19 of its top clients – at least a quarter of which are subject to U.S. wartime sanctions. These include:

• federal security service and successor to the infamous KGB – currently under U.S. sanctions.
• Russian state research institute, which produces advanced navigation, gyroscopy and submarine electronics and is also sanctioned by the U.S.
• also sanctioned by the U.S.
• Gazprombank, Russia´s third largest bank, and Miran, a server rental and data center provider – also both under U.S. sanctions.

Asilian states on the website that it is a partner of Super Micro, provides a link to Super Micro in Holland and features photos with Asilan personnel carrying boxes marked with the Super Micro logo. Its website features multiple links to what it says are Super Micro servers and data storage systems. [1, 2, 3]

Almost $30 Million Of Super Micro Components Were Shipped To Russia´s Largest Importer Of Dual Use Civilian-Military Chips Via A Hong Kong Entity Created 7 Weeks After The War Began

Moscow-based IT distributor Vneshekostil received about $29.4 million of Super Micro products following Russia´s 2022 invasion of Ukraine, per Tradesparq. It appears to have had no prior trading relationship with Super Micro and received most of the components via a Hong Kong exporter created seven weeks after the war began.[67]

Vneshekostil was sanctioned by the U.S. in September 2023 after it became “one of the largest importers of dual-use chips into Russia”, per the U.S. Treasury.

Super Micro Has A Joint Venture With A Chinese State-Run Company Called Fiberhome, Which Is Involved In A Campaign Of “Human Rights Violations And Abuses”, High-Tech Surveillance And Repression Of Ethnic Communities In Western China

Super Micro Has Sold ~$196 Million Of Sophisticated Computer Components To The Joint Venture Since Its Chinese Majority Owner Was Watchlisted By The U.S. Government In 2020

Super Micro Is Vague About Naming This Entity In Its U.S. Public Filings

In October 2016, Super Micro agreed to a joint venture partnership with a Chinese state-owned technology company, per a Super Micro investor call.

Super Micro has a 30% stake and the controlling 70% is held by the Chinese entity, per filings.

Super Micro largely glosses over the relationship and does not specifically identify either the joint venture nor its Chinese business partner in its U.S. filings, though it mentioned the business partner name on investor conference calls in 2017.

The JV partner – Fiberhome Telecommunication Technologies – is named in the filings of a Super Micro subsidiary’s annual report in the Netherlands. The joint venture entity is called Fiberhome Supermicro Information Technologies.[68] [Pg. 28]

FiberHome Telecommunication is a Chinese state controlled entity located in the city of Wuhan, in central China, with the Chinese government holding 70% voting rights, per the Sovereign Wealth Institute and China company records.[69]

The parent group, Fiberhome Technologies Group, along with eight “aliases” and a subsidiary, including Fiberhome Telecommunication, have all been watchlisted by the U.S. Bureau Of Industry and Security (BIS) on its “entity list” since 2020.

Specifically, the U.S. government said the move was aimed at restricting Fiberhome´s access to U.S. technology, accusing it of being:

“Complicit in human rights violations and abuses committed in China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uighurs, ethnic Kazakhs, and other members of Muslim minority groups in the Xinjiang Uighur Autonomous Region”.[70]

The U.S. government has categorized China´s actions in Xinjiang as “genocide and crimes against humanity” with at least 1 million Uyghurs illegally imprisoned and subjected to a litany of abuse including forced labor and torture.

Super Micro discloses that its Chinese business partner has been watchlisted by the U.S. government but it consistently fails to mention the name of its controlling partner nor detail the reasons for investors.

Since July 1, 2020, in the three full fiscal years immediately after the U.S. government flagged Fiberhome´s complicity in the brutal repression of China´s ethnic Uighur minority, Super Micro disclosed it has shipped $196.4 million of high-tech components to the joint venture.[71]

Super Micro justifies its continued participation in the joint venture along with the sale of highly sensitive technology, arguing that it believes it is in compliance with U.S. government controls because the joint venture entity itself is not watchlisted, even though the partner and numerous related entities are.

Super Micro’s lenders, Bank of America, ING and HSBC have a different view. A credit agreement amendment filed in 2022 specifically added language declaring the JV to be a restricted investment, saying Super Micro shall not:

“use the proceeds of any Revolver Loan, or any other credit extended by any Lender, to directly make an Investment in, or otherwise directly support, FiberHome Supermicro Information Technology Co Ltd.”[72]

Super Micro´s Chinese JV Appears To Have Won A 2021 Tender To Supply The Xinjiang Production And Construction Corps – A State-Run Paramilitary Force That Operates Prisons And Forced Labor Camps For Ethnic Minorities

That Paramilitary Organization Had Been Placed Under U.S. Sanctions From July 2020, Prohibiting U.S. Entities From All Transactions, Including Goods And Services

Super Micro’s Chinese JV – Fiberhome Supermicro Information Technologies – says that it provides servers and storage systems for cloud computing, big data and AI to top customers across China and the storage industry, per its website.

In November 2021, Fiberhome Supermicro Information Technologies was awarded a tender to supply the Xinjiang Production and Construction Corps, per an archived notice on Qixin.com, an aggregator service for Chinese corporate filings and notices.

The notice specifies the tender was for server equipment and includes a project number. But we were unable to obtain further details about the specification of the equipment, the value of the winning bid or the intended purpose of the equipment.

On July 31^st, 2020, 16 months prior to that tender being awarded to Super Micro´s Chinese JV, the U.S. Treasury Department had placed the Xinjiang Production and Construction Corps under blocking sanctions for its key role in the “serious human rights abuse” of Uyghurs and other ethnic minorities in China´s western Xinjiang region.

The OFAC notification explicitly states:

“The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”

The Xinjiang Production and Construction Corps (XPCC) is “a paramilitary organization in the XUAR (Xinjiang) that is subordinate to the Chinese Communist Party (CCP)” and has been “implementing a comprehensive surveillance, detention, and indoctrination program targeting Uyghurs and members of other ethnic minority groups”, per the U.S. Treasury notice.[73]

Conclusion: A Serial Recidivist

All told, we believe Super Micro is a classic case of recidivism. Its actions suggest that it hasn’t changed from its checkered past regarding its revenue recognition and accounting practices.

While the company gained an initial lead in supporting the AI industry, it seems to be cutting corners on its accounting, sanctions compliance, and product quality, all while more credible competitors eat away at its margins and market share.

Appendix I:

Super Micro Built Its Factory Right Next Door To The CEO´s Brothers In Taiwan

Now Super Micro, Ablecom And Compuware Are Building Another Shared “Technology Park” In Malaysia

Super Micro´s facilities in Taiwan are co-located with its two disclosed related parties Ablecom and Compuware.[74]

Super Micro built a new, custom, nine-story high, ~800,000 sq. ft facility in 2019, per a corporate press release. Despite building this large facility for itself, as of the end of 2023, Super Micro continued to lease 160,0000 sq. ft of space in Taiwan from its related parties Ablecom and Compuware, including warehouse, manufacturing and office space.

There is little clarity about how the production campus has been developed since 2010 and more importantly how capital expenditure costs have been split.[75]

Now, all three companies – headed by the three Liang brothers – are simultaneously setting up new, multi-million dollar operations in Malaysia, per filings and a corporate website.

While Super Micro describes Ablecom and Compuware setting up in “close proximity” in Malaysia, photos published by Compuware indicate all three companies are creating a shared industrial campus as confirmed by a site visit by a Hindenburg researcher to Senhai Airport industrial park.

Super Micro’s side-by-side construction with Ablecom and Compuware, first in Taiwan and now in Malaysia, shows logistical and financial coordination between all three entities. They appear to be taking decisions in unison on manufacturing capacity and capital expenditure in a way we would more typically expect from a parent and its subsidiaries rather than separate related parties.

Disclosure: We are short shares of Super Micro Computer, Inc. (Nasdaq: SMCI)

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[1] Super Micro’s fiscal year ends on June 30^th.

[2] OEM refers to ‘Original Equipment Manufacturer’, or a manufacturer that makes products for another company to sell.

[3] For example, Super Micro claims to offer its new Direct Liquid Cooling (DLC) solutions in “2-4 weeks”, per its presentation at an industry conference in June 2024. [15:31] This compares to competitors like Hewlett Packard (“HPE”) who disclose lead time of between 6 to 12 weeks for non-liquid cooled solutions, per its June 2024 investor call. [Pg. 3]

[4] An ODM, or original design manufacturer, is a company that develops products themselves before manufacturing them for another company, per Data Center Knowledge.

[5] In ascending order of trailing twelve-month gross margins: Pegatron 4.1%, Compal 4.7%, Inventec 5.3%, Hon Hai 6.4%, Quanta 8.3% and Wiwynn 10.7%, ­­­­­per Bloomberg.

[6] Note that the SEC complaint didn’t specifically name all the Super Micro executives allegedly involved in the scandal. These names were referenced in the 2024 litigation.

[7] Tech Data merged with Synnex in September 2021 to become TD Synnex, per the company press release. It is still commonly referred to as Tech Data – Super Micro’s own partner page, for example, displays many “Tech Data” entities.

[8] Taiwanese corporate filings show 10,769,976 Ablecom shares registered to Steve (Jianfa) Liang and 2,389,346 to his brother Bill (Jianda) Liang. A further 15,830,280 shares are allocated to a person named Chunmei Liao (an alternative spelling for Liaw and likely the sibling of co-founder Wally Liaw). Only director and supervisor shareholdings are publicly shown, not the full shareholder register.

[9] Per media articles, Charles (Jianhou) Liang (born 1958) is the eldest of four brothers, followed by Steve (Jianfa) Liang (born 1962), then Bill (Jianda) Liang (born 1966) and James (Jianguo) Liang (born 1970).

[10]  Taiwanese corporate filings show 4,671,200 Compuware shares registered to Bill (Jianda) Liang and 2,500,000 to his brother Steve (Jianfa) Liang. Another 6,238,800 are registered to Chunmei Liao, the likely sibling of Super Micro co-founder Wally Liaw.

[11] Up until its 2016 financial report – prior to delisting – Super Micro described Compuware as one of Ablecom´s subsidiaries. In its 2023 full-year filings, Super Micro describes Compuware as an “affiliate” of Ablecom, apparently on the premise that Ablecom has “significant influence” over Compuware operations. Ablecom currently lists Compuware as part of the “Ablecom Group” on its website.

[12] Bill Liang´s shareholding was directly in his name and also via a family entity Ablestnet Computer Inc. Steve Liang and his family holding in Compuware was directly in his name and also via family investment companies Jie Teng Investment, Yi Zhan Investment and Wei Chen International Investment. [Pg. 18]  

[13] Ablecom´s address is listed as at 306 Chang´An St. while Super Micro´s address is listed as Xingfeng Road. The streets are perpendicular.

[14] There is little data for the value of Ablecom´s exports so we measured records based on weight of shipments.

[15] Ablecom’s two other export customers in the U.S. in 2024 were King Star Computer, a California computer company with 9 associated employees on LinkedIn and Ixystems, a software and storage company also in California, per Tradesparq. Internationally, Ablecom exported to a single customer both in India and Vietnam and to three in Russia, per the available Tradesparq data.

[16] In that period, Compuware has shipped to only one other U.S. customer named in Tradesparq as California-based Antron Electronics. Internationally, Compuware exported to a single customer in each of India, Kazakhstan and the Philippines and to three customers in Russia, per Tradesparq.

[17] Barclays in its September 2023 initiation report listed “liquid cooling and rack scale” as key technology differentiation. JP Morgan wrote in its March 2024 initiation report that “beyond customization, differentiation also stems from selling full rack solutions and liquid cooling”.

[18] While BAMSEC transcribes Charles Liang’s remarks as “we are leading the industry”, we checked the tapes and believe it to be “we are beating the industry”; this is also consistent with Bloomberg’s transcription.

[19] Super Micro simply states “We work with Ablecom to optimize modular designs for our chassis and certain of other components. We outsource to Compuware a portion of our design activities and a significant part of our manufacturing of subassemblies, particularly power supplies.”

[20] The search can be recreated at https://findbiz.nat.gov.tw/ and searching via the company business number “28631648”. Per these records, James Liang held 8,256,000 shares. Total share capital is 9,635,000.

[21] Total share count is 210,000 shares per the Taiwanese corporate records. Despite ownership showing the entity was owned 99% by James Liang, the company, described Aeon Lighting as its parent company on its website.

[22] Ablecom´s address is listed as at 306 Chang´An Road while Super Micro´s address is listed as No. 1899 Xingfeng Road. The streets are perpendicular and the Super Micro industrial campus is accessible from both roads.

[23] Aeon Biotech’s website, for example, makes reference to the “Disinfection Box” and “disinfection light from space”.

[24] The same interview says that Charles Liang has three sisters but does not state their occupations.

[25] 亞科數位科技有限公司 or “Yake Digital Technology Co.” is the Chinese name of the entity in HK,

[26] The search can be recreated at https://findbiz.nat.gov.tw/ and searching via the company business number 86223917. Total shares outstanding is 2,980,000.

[27] We searched all Super Micro’s available financial records, using BAMSEC and Bloomberg, with the term “Lambda”. This only returned one reference to a license agreement announced in June 2024 for data center space, but no mention of any investment or the funding round.

[28] To use industry parlance, this appears to be a “value added reseller” model where Leadtek build servers using Super Micro parts.

[29] Specifically on its Q4 2024 earnings call, Super Micro attributed the margin decline to its hyperscale mix, “expedited cost” of DLC liquid cooling, components shortage, and $800 million in revenue that was shifted into next quarter.

[30] Wells Fargo research speculated that Tesla accounted for 16.8% of Q3 2024 revenue in a May 6, 2024 Flash Note.

[31] Essentially as GPU cloud player, Genesis rents out GPU compute to its customers over cloud.

[32] We estimate the deal to be around 10,000 GPUs, per our channel checks.

[33] If for example, Genesis Cloud was half the size of Taiga Cloud’s $800 million investment with HP, it would be ~40% of Super Micro’s FY 23 European revenue, although the deal would likely be multi year. Taiga describes itself as the “largest dedicated Generative AI cloud service provider” in Europe.

[34] Based on H100 GPU costing between ($30,000-$40,000) per media estimates and an average of 8 GPUs per server.

[35] The list published by Super Micro includes only Cuba, Iran, North Korea, Sudan, Syria and the

geographic region of Crimea.

[36] The U.S. government had imposed successive waves of sanctions on Russian entities and individuals and restricted the export of certain goods since 2014 in response to Russia´s invasion of Ukraine´s Crimea peninsula and the threat of cyberattacks.

[37] Our understanding of the breadth of the export restrictions is also reflected in this report by the New York Times.

[38] Despite having operations worldwide, including Europe and Taiwan, Super Micro says it “designs, develops, and manufactures the majority of our development in the United States.”

[39] The total volumes of imports and exports may be underestimated given that the Tradesparq platform is unable to access trade databases from certain countries or for certain country pairings.

[40] Our methodology consisted mainly of downloading import and export information from Tradesparq using the search terms “Supermicro” and “Super Micro” as exporter, importer and brand name. We then sifted data using pivot table analysis.

[41] Others include these [1,2,3]

[42] The BIS guidance includes a non-exhaustive list of countries, including Kazakhstan, that may serve as transshipment points for restricted goods ultimately destined for Russia. [Pg.7] The export of Super Micro products to Kazakhstan grew 565% in 2022 vs 2021 and a further 19.5% in 2023 vs 2022, per Tradesparq.

[43] Three-quarters of those exports were shipped directly by Super Micro and its subsidiaries along with the two largest third-party exporters. The remainder was shipped in much smaller volumes by approximately 65 third-party exporters, per Tradesparq records. The two main third-party exporters shipping Super Micro products to Russia prior to the invasion of Ukraine were ASBISc Enterprises PLC and EasyPro Ltd, per Tradesparq.

[44] All these countries have been specifically named as potential transshipment points by the U.S. government – as well as Hong Kong, which has also been identified as a trade hub for the “world´s most brutal regimes”. [Pg.7]

[45] Most of the exporters of Super Micro products were new customers. The overwhelming majority only began handling Super Micro products to Russia after the invasion of Ukraine, while just eight appear to have had any relationship exporting Super Micro goods to Russia prior to the invasion, per Tradesparq data. 64.2% of the Super Micro exports to Russia originated in Taiwan, according to the available Tradesparq data. Taiwan is a major hub and manufacturing center for Super Micro operations. 22.32% of the Super Micro products exported to Russia originated in “China”, per Tradesparq. It was not clear whether that referred to mainland China or also to Taiwan. 7.4% of the exports to Russia originated in the U.S., per Tradesparq.

[46] Tradesparq data shows at least $15.15 million of Super Micro products were exported to Russia in calendar year 2021. Worldwide sales excluding U.S. were $2.42 billion for calendar 2022, per Super Micro quarterly filings.

[47] Super Micro worldwide sales, excluding the U.S., were $2.58 billion in calendar 2023, based on quarterly filings. [1, 2, 3, 4]

[48] In a January 2024 speech, Assistant Secretary of Export Enforcement Matthew Axelrod spelled out the complexity of the task facing the BIS and explained his agency was vastly under-resourced.

[49] Blocking sanctions were imposed using national emergency measures under U.S. presidential executive order EO 14024 from April 2021. The order was originally separate from other executive orders targeting Russia after its 2014 invasion of Crimea and February 2022 invasion of wider Ukrainian territory. EO 14024 “addresses national security threats posed by specified harmful foreign activities of the Russian Federation, including: its efforts to undermine the conduct of free and fair democratic elections…and facilitating malicious cyber-enabled activities against the United States”. It was later extended to include activities in the Russian technology and defense sectors. 

[50] Details of sanctioned exporters can be found on the U.S. government consolidated screening list, the OFAC sanctions list or on the hyperlinked press releases. For the avoidance of confusion we state the name of the entity as it appears on U.S lists and any name variation found on Tradesparq data is listed in (parentheses): ARP Investments Ltd, Asay Ic Ve Dis Ticaret Limited Sirketi (Asay Iс Ve Dis Ticaret Ltd), Belluga Ic Ve Dis Ticaret Limited Sirketi (Belluga Ic Ve Dis Ticaret Limited), Carovilli Trading, Kartal Exim Dis Ticaret Limited Sirketi (Kartal Exim Dis Ticaret Limited), Koc Gemicilik Ve Tasimacilik Dis Ticaret Limited Sirketi (Koc Gemicilik Ve Tasimacilik Dis Ticaret Limited), Kominvex DOO Beograd (Kominvex D.O.O), Luchengtech Co. Ltd., NIT Group Fze (N.I.T Group Fze), New Horizons Trading Limited, Pixel Devices Ltd, Polarstar Logistics LLC, Secret Logistics Solution Fzco, Shenzhen Biguang Trading Co. Ltd, Thamestone SA, Asia Pacific Links Limited, Elmec Trade OU.

[51] Details of sanctioned importers can be found on the U.S. government consolidated screening list, the OFAC sanctions list or on the hyperlinked press releases. For the avoidance of confusion we state the name of the entity as it appears on U.S lists and the name in Russian as found on Tradesparq data is listed in (parentheses): OOO Novyi Ai Ti Project (ООО НОВЫЙ АЙ ТИ ПРОЕКТ), OOO Vneshekostil (ООО ВНЕШЭКОСТИЛЬ), OOO Lanprint (ООО ЛАНПРИНТ), Compliga (ООО КОМПЛИГА), Silkway Limited Liability Company (ООО СИЛКВЕЙ), Limited Liability Company Fortap (ООО ФОРТАП), AK Systems (ООО АК СИСТЕМС), Aktsionernoe Obshchestvo Taskom (АО ТАСКОМ), Brand Server Options – BSO (ООО БСО), Joint Stock Company Scan (АО СКАН), Nauchno Proizvodstvennoe Predpriyatie Itelma (ООО НПП ИТЭЛМА) Limited Liability Company Sansara (ООО САНСАРА), Baltelektron Limited Liability Company (ООО БАЛТЭЛЕКТРОН), Inelso LLC (ООО ИНЕЛСО), OOO Orlan (ООО ОРЛАН), Limited Liability Company Device Consulting (ООО ДЕВАЙС КОНСАЛТИНГ), SMT-iLogic (ООО СМТ-АЙЛОГИК).

[52] Details of watchlisted exporters can be found on the U.S. government consolidated screening list. For the avoidance of confusion, we state the name of the entity as it appears on U.S lists and any name variation found on Tradesparq data is listed in (parentheses): Benico Limited, Ervacan Makina Ekipmanlari Ve Sanayi Tedarik. Ltd Sti (Ervacan Makina Ekipmanlari Ve Sa. Ted. Ltd), Grants Promotion Service Ltd, Most Technology Limited (Most Technology Company Limited), Muller Markt LLC, Shanghai IP3 Information Technology Co., Shenzhen One World International Logistics Co. Ltd., STK Electronics, Transeurope Bilisim Dis Ticaret Limited Sirketi (Transeurope Bilisim Dis Ticaret Limited), Win Key Limited, E-Chips Solution Co. Ltd.

[53] Per the consolidated screening list, these companies are subject to either “presumption of denial” or “policy of denial”, which means they will be routinely refused license applications to export restricted U.S. products.

[54] Details of watchlisted importers can be found on the U.S. government consolidated screening list. For the avoidance of confusion, we state the name of the entity as it appears on U.S lists and the name in Russian as found on Tradesparq data is listed in (parentheses): Grant Instrument (ООО ГРАНТ ИНСТРУМЕНТ).

[55] The notice referred to items that were already banned for export to Russia but was intended to make it even easier for exporters to check.

[56] Apart from the HS export codes, most of the Super Micro components shipped to Russia are not described in great detail on the Tradesparq records. Items are vaguely described as “server platforms”, “motherboards”, “computing machines” and “data processing units”. In the relatively few instances where specific chipsets are mentioned, they generally refer to apparently older vintage Intel and AMD models (Intel Atom C3758, Xeon E3 15578L, Xeon CLX 6242R, 4216, 5220R, AMD Rome 7252, Milan 7543). That pattern reflects efforts made by Russia to circumvent the impact of sanctions by using lower grade chips and even domestic computerware for military applications.

[57] More than half the exports of that category of product were shipped by just three exporters, Koc Gemicilik Ve Tasimacilik Dis Ticaret Limited Sirketi (Turkey) now under OFAC sanctions, Agu Information Technology Co., Ltd (Hong Kong) and Sky Walk Company- Fzco (UAE), per Tradesparq. Those locations have been flagged as potential transshipment points of restricted goods to Russia in U.S. Department of Commerce guidance and in media reports. [Pg. 7]

[58] We have seen no trade data indicating Niagara Computers had imported Super Micro products in 2024.

[59] Business Development International was incorporated in California in 2002, per corporate records. Its San Jose address seems to be a Regus co-working space.

[60] Corporate filings show Viatech International Trade Corporation applied to voluntarily wind up in December 2022.

[61] To search the Turkish corporate gazette, we used the names including Turkish accents or the registration number. In both cases we stipulated the cities where the entities are registered: Koç Gemicilik Ve Taşimacilik Diş Ticaret Limited Şirketi, 352819-5, Istanbul, Alfament Yazilim Teknoloji Sanayi Ticaret Limited Şirketi, 118684, Antalya, Amd İthalat İhracat Ve Ticaret Limited Şirketi, 378055-5, Istanbul.

[62] The sole shareholder is named as Dzheikun Bairamov and listed as being a Ukrainian citizen, per the Turkish corporate gazette. An online search suggests he may originally be from Kharkiv in eastern Ukraine.

[63] An earlier more basic version of the company website was hosted at https://kocgemicilikllc.com. The domain name search shows that website was registered to Valeriy Valerevich Martynov with the email ets-m2018@internet.ru  (which corresponds to the company ООО “ЕТС-М” in Russian.

[64] Since the start of the war, Koc Gemicilik Ve Tasimacilik has become the largest single exporter of Super Micro to Russia, accounting for just over 15% of total exports to Russia post-invasion, per trade data. Of all the goods it exported to Niagara, 99.5% correspond to HS prefix 8471.50 – the items that the U.S. Bureau of Industry and Security has warned the Russian army is acquiring for military use.

[65] Super Micro also lists Guangzhou Wuzhou Technology, based in mainland southern China, as another of its authorized partners. Guangzhou Wuzhou Technology has a subsidiary in Hong Kong named HK Wuzhou Trading Company, with both sharing the same legal representative, per our analysis of Chinese and Hong Kong corporate filings.  The 100% shareholder of HK Wuzhou Trading Company is Xie Gaohui, per HK corporate filings. Xie Gaohui is named in media articles and on the Guangzhou Wuzhou Technology website as its director and general manager. The parent company´s largest shareholder is a Chinese state-owned entity and describes itself as a leader in server customization, per its website. On June 21^st, 2023, Guangzhou Wuzhou´s Hong Kong subsidiary shipped at least $71,250 of Super Micro products to a customer in Russia, per Tradesparq data. 93% of those components matched the HS codes 8471.50 and 8471.80 – both listed on the U.S. common high-priority list.

[66] Asilan was founded in 2013 and describes itself as a supplier of software and hardware and says it assembles, tests and supplies solutions for supercomputers and artificial intelligence systems, per its website.

[67] Agu Information Technology was incorporated in Hong Kong on April 11^th, 2022. The company was mentioned as an alleged sanctions violator in a report by the U.S. government´s U.S.-China Economic and Security Review Commission.

[68] Those filings can only be obtained via the Dutch corporate registry after registration and a fee payment – an added layer of steps that many investors may not routinely take.

[69] The stake is controlled by the Chinese government´s Assets Supervision and Administration Commission of the State Council, per filings. The Parent entity Fiberhome Technology Group is a fully state-owned enterprise, per filings. In 2018, Fiberhome Group merged with Datang Telecom, per media reports. Datang Telecom was alleged to have extensive ties to the Chinese People´s Liberation Army (PLA) in a 2012 report prepared by U.S. defense contractor Northrop Grumman for the U.S. congressional U.S.-China Economic and Security Review Commission. [Pgs. 68, 76]

[70] In general terms, the entity list imposes export restrictions and license requirements on companies suspected of engaging in “activities sanctioned by the State Department and activities contrary to U.S. national security and/or foreign policy interests”.

[71] 2021 $51.2 million; 2022 $121 million; 2023 $24.2 million, per its 10-K 2023.

[72] Note that the revolving agreement has a slightly different name variation for the JV entity, likely due to translation differences (i.e. “technology” vs. “technologies” as referenced in the Dutch filings.)

[73] The Xinjiang Production and Construction Corps plays a leading role in extrajudicial internment and imprisonment; land expropriation; forcible migration of people; repressive policing; social engineering; religious persecution; operating prisons and forced labour camps, according to a 90-page investigation by researchers at the UK´s Sheffield Hallam University.

[74] Ablecom´s address is listed as at 306 Chang´An St. while Super Micro´s address is listed as Xingfeng Road. The streets are perpendicular.

[75] Super Micro has consistently stated that it and Ablecom have “separately constructed manufacturing facilities”. [1, 2] But Ablecom describes construction of the Super Micro Science and Technology Park as a “joint venture” costing an initial $172.4 million (TWD 5 billion), per a press release dated January 2012 posted on the English-language version of its website.