Supermicro execs allegedly smuggled $2.5B in Nvidia AI GPUs to Alibaba through Thailand

Supermicro-tied execs used Thailand government entity to ship Nvidia AI GPUs to China -- report alleges Chinese web giant Alibaba received restricted servers

A Bloomberg investigation on Friday shed some additional light on the indictment of Supermicro executives and employees tied to a $2.5 billion smuggling of restricted hardware to China. As it appears, the group allegedly used a Thailand-based government-related entity to route restricted Nvidia AI GPUs to none other than Alibaba itself, whose AI ambitions can easily absorb hardware worth far more than a couple of billion dollars. Supermicro's alleged violations of U.S. export controls that ended up as shipments of restricted Nvidia AI accelerators to China and Russia have caught a lot of attention in recent years, as billions of dollars worth of hardware were shipped to American foes. The new Bloomberg report claims that Thailand-based Obon Corp. is the previously unnamed Southeast Asian intermediary referenced in the indictment, which claims that some of the hardware ultimately reached Alibaba. The intermediary described in court documents as 'Company-1' was allegedly Obon, a Bangkok-based company connected to Thailand's sovereign AI initiatives, according to Bloomberg. The new firm further states that some of the systems sold through OBON may have gone to Alibaba, although the Chinese technology giant denied any involvement and said it had never deployed prohibited Nvidia hardware in its data centers. The report notes that the servers reportedly included Nvidia H200-based systems, which fall under U.S. export restrictions intended to prevent China from obtaining top-tier AI compute hardware without government approval. By now, H200 has been approved for exports to China, though it has not reported selling them to China officially. The original indictment accused Supermicro co-founder Yih-Shyan 'Wally' Liaw, Supermicro Taiwan sales manager Ruei-Tsang 'Steven' Chang, and third-party broker Ting-Wei 'Willy' Sun of organizing a large-scale diversion network that rerouted Nvidia Hopper-based AI servers. Prosecutors alleged that the group used a Southeast Asian front company, falsified documentation, and maintained inventories of dummy servers to conceal actual shipments of systems containing advanced Nvidia GPUs into China. The alleged perpetrators used hair dryers to transfer serial-number labels from legitimate servers onto empty chassis to deceive inspectors and install the restricted hardware afterward, according to the allegations. The U.S. authorities estimate that the operation generated roughly $2.5 billion in sales beginning in 2024. Liaw and Sun were arrested, while Chang continues running for his life. In general, the case raises concerns about the effectiveness of export-control enforcement across Southeast Asia. Nonetheless, as long as a market like China exists, the supply will always be there. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

US suspects Thailand's OBON Corp helped smuggle NVIDIA chips to Alibaba

US prosecutors believe a company at the centre of Thailand's national AI strategy helped move billions of dollars in Nvidia-equipped Supermicro servers into China, with Alibaba among the eventual customers, Bloomberg reported on Friday. The company is OBON Corp., a Bangkok-based AI infrastructure firm that has been a public partner of Thailand's National AI Strategy and that has positioned itself as a regional cloud and supercomputing provider. Bloomberg's sources identify OBON as the entity referred to in the March 2026 federal indictment of Supermicro co-founder Yih-Shyan "Wally" Liaw and two associates only as "Company-1". Liaw was arrested in March on charges of conspiring to violate the Export Controls Reform Act and faces up to 20 years on the lead count. Prosecutors say he and a "rotating cast" of brokers used the Southeast Asian intermediary to buy and re-route around $2.5bn of servers between 2024 and 2025, with falsified shipping paperwork, swapped serial numbers and dummy servers built to confound inspections. OBON has not been charged. Alibaba has not been charged. Both are characterised in Friday's reporting as ends of the diversion chain whose role US prosecutors are continuing to investigate. Neither company had commented at the time of publication. Three things move forward with Friday's piece. First, the geographic centre of gravity. The March indictment referenced Southeast Asia generically; naming a specific Thai company places the diversion route on the same map as a national AI policy that the US has otherwise treated as a partner programme. Thailand applied last year for chip-import allocations under Washington's tiered framework, on the implicit basis that its compute would not be re-exported. Second, the customer end. Alibaba's Aliyun cloud and DAMO research arm have been the most visible state-aligned buyers of frontier AI compute in China. The 2025 export-control rules placed Alibaba on watch lists that explicitly limit its access to top-of-stack Nvidia parts. If Bloomberg's sources are right, the company received them anyway, through a route designed to look like Thai sovereign demand. Third, the corporate exposure at Supermicro. The company has consistently described the indicted individuals as a small group acting outside its compliance regime. CEO Charles Liang restated that line publicly in May, after the company's audit committee opened an internal investigation. Friday's reporting does not name additional Supermicro employees, but it does sharpen the question of how the volumes involved cleared the company's own export-control checks for two years. The $2.5bn Supermicro indictment is the largest US enforcement action under the AI export-control regime so far, and the dollar number is partly a function of where Nvidia hardware now trades. Chinese grey-market prices for the B300 reaching $1m, roughly double sticker, demonstrates a market that supports very large arbitrage; the gap between US-allocated price and Chinese-cleared price is what funds the brokers and the freight forwarders who make schemes like this work. The case sits inside the broader US-China chip-equipment standoff. Washington has used both export controls and inbound-investment rules to slow Chinese access to advanced compute; the parallel White House push to stop AI-model distillation flowing the other way is the other front, aimed at preventing Chinese labs from reverse-engineering frontier models trained on US infrastructure. Each is hard to enforce in isolation, and harder when sovereign partner programmes are part of the channel. Hardware-level countermeasures have moved up the policy agenda accordingly. Proposals around hardware-level chip tagging, phone-home location verification and post-shipment audit rules have all gained traction with the working group reviewing the controls. None of those would have caught a paperwork-and-reflagging operation cleanly; they would have raised the operational cost of running one. The investigative thread now extends from Bangkok to Hangzhou, and the question puts on the agenda is whether the next round of controls will treat partner-state programmes as trusted recipients or as additional surfaces to verify. Liaw's case is scheduled for a status conference in early summer. Bloomberg's reporting suggests the prosecution may add new defendants as the OBON link is pursued. Thai authorities have not publicly commented on cooperation with the US investigation, although Thailand's Ministry of Digital Economy and Society has previously stated it expects partner companies to comply with export-control rules. For Supermicro, the immediate concern is not a new indictment but a deepening corporate-governance problem. The audit committee's internal review is open-ended, and the company has acknowledged that customer concentration in the Southeast Asia segment will be reassessed. Shares were down roughly 33% over the months following the March arrest. Friday's reporting did not move the stock materially in pre-market trading. For Nvidia, the case is closer to noise than threat. The company sells what it can ship under licence, and the prosecution treats the diversion as a downstream act.

NVIDIA's AI Chips Reached China's Alibaba Through Thailand, As US Indicts Supermicro Execs In $2.5 Billion Smuggling Ring

NVIDIA's AI chips have once again bypassed barriers and landed at Alibaba in China, as the US suspects Supermicro's role in smuggling through Thailand. Despite China dropping the hammer on NVIDIA's chips to increase dependency on in-house AI chips, the leading Chinese firms, such as Alibaba, are still procuring the latest hardware from NVIDIA through illegal channels. As per Bloomberg, several Supermicro employees, including high-level executives, are involved in a $2.5 billion smuggling case. The case revolves around shipping several restricted NVIDIA AI servers to China through Thailand. It is alleged that the company used its links within the Thailand Goverment to ship a large volume of AI servers, based on NVIDIA's GPUs, from Thailand to China, which ended up at Alibaba. This is significant as we have heard how Chinese firms are reaching out to regional allies and nations to procure cutting-edge AI chips, which are otherwise banned from sales in the country due to US export regulations. In an emailed statement to Reuters, an Nvidia spokesperson said the ⁠company expects its ecosystem partners to adhere to strict compliance at every level, stating that it will continue working with the government to enforce the rules. Reuters The investigation discovered that Supermicro was working with a Southeast Asian company, along with a group of third-party brokers, to smuggle AI chips into China. The company is Bangkok-based OBON Corp, which is a major AI firm in Thailand, but the $2.5 billion worth of AI equipment that was sold to them had ended up at Alibaba. "Alibaba has no business relationship with Super Micro, OBON or any third-party brokers who may have been mentioned in the indictment in question," a spokesperson for the Chinese company said. "We have no involvement in the alleged smuggling activities. We do not currently use, and have never used, any banned Nvidia chips at our data centers." It is said that more than $500 million worth of AI equipment was moved between April and May 2025. This news comes at a time when Thailand continues to attract investments from major AI firms such as Microsoft, Google, and ByteDance. The AI chips mostly included NVIDIA's H200s. This was around the time when the H200 was banned from sales in China, but since then, the US has eased restrictions, and said that the H200 can be sold to China, but a 25% cut will be added to the national treasury. So far, several similar smuggling cases have been reported, and given the demand in China and how the black market operates in the Asia-Pacific, there's no real way to tell just how many chips are still landing in the country despite the export regulations. This outlines a severe lack in the current approach, and a more robust measure needs to be formed to avert such cases. Meanwhile, NVIDIA's "official" share in China has dropped to Zero as Jensen Huang said that they are selling no more chips there, but has insisted that global competition should continue.

Super Micro, NVIDIA Chips And Alibaba: Inside The Explosive AI Smuggling Allegations - NVIDIA (NASDAQ:NVD

U.S. Probe Targets Alleged AI Chip Diversion Network People familiar with the matter identified the unnamed company in the indictment as OBON Corp., a Bangkok-based company. According to those people, some of the $2.5 billion worth of servers sold to OBON ultimately reached Alibaba. The indictment itself does not name either OBON or Alibaba, and U.S. authorities have not publicly accused either company of wrongdoing. The March indictment triggered a sharp selloff in Super Micro shares and marked the largest crackdown tied to alleged AI chip smuggling since Washington imposed restrictions on NVIDIA chip exports to China in 2022. NVIDIA, Super Micro And Regulators Respond The allegations renewed concerns about oversight across NVIDIA's AI hardware ecosystem, especially in Southeast Asia. NVIDIA said its partners must maintain strict compliance with export-control regulations and noted that its diligence efforts have helped authorities pursue suspected smuggling operations. Super Micro launched an internal investigation, placed Liaw on administrative leave, and said the company remains committed to complying with U.S. export laws. U.S. authorities alleged that Super Micro temporarily paused shipments to Company-1 after internal audits flagged unusual sales activity. The Commerce Department's Bureau of Industry and Security later requested a hold on all shipments to the company, and that restriction remained active as of the March indictment. Washington's export restrictions on NVIDIA chips and the broader crackdown on smuggling have sharply disrupted China's AI hardware market, driving up server prices, tightening supply, and reshaping competition among semiconductor players. NVIDIA Server Prices Surge In China Chinese tech firms now reportedly pay around $1 million for NVIDIA B300 servers, nearly double the roughly $550,000 price in the U.S., due to export controls and reduced gray-market supply. Buyers unable to afford direct purchases have increasingly shifted toward rentals, with some one-year contracts reportedly reaching 190,000 yuan per month. Smuggling Crackdown Tightens Supply The B300 server is not officially available in China, and NVIDIA said partners must comply with strict export regulations while warning that diverted systems would not receive company support. The gray market reportedly weakened further after U.S. prosecutors charged a Super Micro-linked executive in an alleged smuggling case tied to NVIDIA hardware. Supply pressures have also intensified because NVIDIA's H200 chips, despite export approvals from both Washington and Beijing, have yet to reach Chinese data centers. China's AI Demand Continues To Climb The restrictions come as Chinese AI adoption accelerates rapidly. Reuters cited Morgan Stanley data showing Chinese AI models accounted for 32% of global token usage in March 2026, up from 5% a year earlier, driven by growth in coding and agentic AI applications. Companies including MiniMax, Zhipu, and Alibaba's Qwen reportedly recorded sixfold to sevenfold increases in token usage between December and March. Price Action: NVIDIA shares were up 1.08% at $213.78 and Super Micro Computer shares were up 1.19% at $34.02 during premarket trading on Friday, according to Benzinga Pro data. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

US suspects Nvidia chips smuggled to Alibaba via Thailand, Bloomberg News reports

May 8 (Reuters) - A firm linked to Thailand's national AI initiative is suspected of helping smuggle billions of dollars' worth of Super Micro Computer servers containing advanced Nvidia chips to China, Bloomberg News reported on Friday, citing people familiar with the matter. The intermediary buyer was an unnamed Southeast Asian firm referred to by prosecutors as "Company-1", which Bloomberg identified as Bangkok-based OBON Corp, citing the sources. Alibaba Group Holding was among the end customers, the report added. Reuters could not immediately verify the report. Nvidia, Super Micro Computers and Alibaba Group also did not immediately respond to Reuters' requests for comment, while OBON could not be immediately reached. An Alibaba spokesperson told Bloomberg that the company has no business relationship with Super Micro, OBON or any third-party brokers mentioned in the indictment. In March, the U.S. Justice Department charged Super Micro co-founder Yih-Shyan Liaw, sales manager Ruei-Tsang Chang and contractor Ting-Wei Sun with running a scheme to route U.S.-made servers through Taiwan to Southeast Asia, where they were repackaged into unmarked boxes and smuggled into China. Prosecutors alleged the group moved at least $2.5 billion in U.S. AI technology, including more than $500 million shipped between April and mid-May 2025. Some of the $2.5 billion servers sold to OBON allegedly went to Alibaba, the report added. The United States banned the export of high-end chips from Nvidia to China in 2022 amid concerns that they could be used for military purposes, though it later approved sales of Nvidia's second-most powerful H200 chips in January this year under certain conditions. Separately, Super Micro shareholders sued the Silicon Valley server maker in March, accusing it of securities fraud by allegedly concealing its reliance on sales to China that violated U.S. export laws. (Reporting by Preetika Parashuraman in Bengaluru; Editing by Sumana Nandy)