Taiwan’s investigation into smuggled AI hardware, which began with Super Micro and had spent months working through the island’s distributors, has now reached inside Nvidia itself.
On July 28, prosecutors detained an Nvidia employee as part of the probe into whether restricted AI servers were being routed to China, Bloomberg first reported, the first time the widening case has touched the company whose processors sit at the centre of it.
The employee, whom local media identified as a senior business-development manager, was held by the Keelung District Prosecutors’ Office, which has driven the case since spring.
Prosecutors allege he signed off on end-user and “know your customer” documents that helped restricted Nvidia servers clear export review before the hardware was diverted to China, according to Taiwanese press accounts of the case.
He has not been charged, and the allegations have not been tested in court. Much of this began as the first criminal probe of its kind on the island.
The investigation grew out of something unrelated. Coast Guard officers working a drug-smuggling case stumbled onto an underground supply chain, and the chip thread has since pulled in Super Micro and several of its Taiwanese distribution and data-centre partners.
Investigators say roughly 50 servers built around Nvidia’s GB300 Grace Blackwell Ultra chips, together worth about NT$700 million, or some $21 million, were seized in May.
Prosecutors allege shell companies placed the orders and the machines were then parked in a Taiwanese data centre to look as though they had never left the island, before being routed onward through third countries. Earlier reporting pointed to Japan as one such transshipment point on the way to Hong Kong and mainland China.
Because Taiwan has no law that directly criminalises exporting AI chips to China, prosecutors have leaned on charges of document forgery and breach of trust.
“It’s not a criminal violation in Taiwan to export AI chips to China, obviously it is under US law,” Chris McGuire, a fellow at the Council on Foreign Relations, told Bloomberg.
A proposed amendment to Taiwan’s Foreign Trade Act would close that gap, though it has not yet passed, which leaves prosecutors building a smuggling case on paperwork offences rather than on the exports themselves.
The detention widens a case that had, until now, centred on Super Micro. Prosecutors moved to detain three people in May, including Super Micro co-founder Yih-Shyan “Wally” Liaw, and held further Super Micro staff through July.
The company has said it is cooperating, that it is not itself a target of the investigation, and that it suspended four Taiwan-based employees connected to the matter.
The Taiwanese proceedings run in parallel with a US case. In March, the Justice Department unsealed an indictment alleging a $2.5 billion scheme to divert Nvidia-powered servers to China through falsified documents and decoy shipments, with Liaw among those charged.
That case turned on falsified end-user paperwork, unmarked boxes, and a pass-through firm, a set of tactics that echoes the document offences Taiwanese prosecutors are now pursuing.
Washington has restricted sales of Nvidia’s most advanced processors to China since 2022, and enforcement has struggled to keep pace with demand, a gap the dummy-server indictment laid bare.
Nvidia has consistently said it complies with export controls and cannot service or support products that reach customers through illicit channels. Jensen Huang has called black-market data centres assembled from smuggled parts a dead end, arguing that diverted chips are effectively useless without the company’s continued technical support.
The company had not commented publicly on the detention of its own employee at the time of writing.
What happens next runs through the Keelung court, which will decide whether the Nvidia employee is held further or released on bail while the inquiry continues. For a case that started with a drug bust and a shipping container, it has travelled a long way up the supply chain.
