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Super Micro Computer CEO Charles Liang spoke out during the company\u2019s fiscal third quarter earnings call to deliver a message. \u201cNo one\u201d at the company besides three indicted employees\u2014including cofounder Yih-Shyan \u201cWally\u201d Liaw\u2014were involved in what prosecutors have called an elaborate scheme to smuggle servers to China in violation of U.S. export controls, said Liang. The stock rose 18% in after-hours trading. <\/p>\n
The server manufacturer\u2019s third quarter earning call on Tuesday was the first since Liaw and two other defendants were indicted in a criminal investigation over U.S. export controls and an alleged scheme to smuggle $2.5 billion in servers to China.<\/p>\n
Michael Staiger, the VP of corporate development, informed analysts at the onset of the quarterly call that the company would focus on financial results during the call\u2019s Q&A portion. Unmoved, analysts started the Q&A with questions about the indictment fallout. Staiger said based on what\u2019s known right now, Supermicro doesn\u2019t think it will need to restate earnings, nor does it believe more employees were involved.<\/p>\n
Later, when another analyst raised the topic of the investigation and the impact on the company again, Staiger attempted to gently rebuff the question by \u201cgoing back to my earlier comments\u201d that Supermicro itself was not named in the federal indictment. He said there was nothing more to add besides that the company takes the allegations \u201cseriously\u201d and is conducting an internal, board-led investigation into the alleged conduct of those involved.<\/p>\n
That\u2019s when, Liang, the CEO, chairman, and co-founder, jumped in.<\/p>\n
\u201cBased on what we know so far, though that could change as the investigation progresses, no one from the company other than those named in the DOJ indictment were involved,\u201d said Liang. \u201cSo we have very good confidence [in] our integrity.\u201d<\/p>\n
Liang did not offer evidence or attribute his declaration to counsel or law enforcement. Given that Liang is a member of executive management and the investigation is being led by lead independent director Scott Angel and audit chair Tally Liu, it\u2019s unclear how involved or what details he might have from the ongoing investigation that would lead him to claim no one else from Supermicro was involved beyond the three named in the indictment.<\/p>\n
A PR representative for Supermicro did not elaborate, but noted that Liang qualified his comment by noting his view was based on what the company knows and could change. <\/p>\n
Supermicro has been contending with allegations that a senior vice president and board member\u2014who has since been fired\u2014organized and helped carry out an elaborate scheme to violate export controls. In March, the U.S. Department of Justice charged Liaw and two other workers with illegally routing servers with Nvidia GPUs to China.<\/p>\n
Federal prosecutors have accused Liaw of concealing the scheme from auditors and the company, while successfully fooling inspectors attempting to verify export compliance with a warehouse he allegedly organized and filled with thousands of fake servers. Prosecutors accused Liaw and the two other defendants of allegedly using hair dryers to steam shipping labels off packages to set up the fake warehouses in order to illegally route the servers to China in 2024 and 2025. The scheme allegedly involved $2.5 billion in server hardware and highly coveted Nvidia GPUs.\u00a0<\/p>\n
Liang and Supermicro were not named in the indictment; Liaw has pleaded not guilty and is free on a $5 million bond.\u00a0\u00a0<\/p>\n
The company announced on April 7, following Liaw\u2019s indictment, that it would conduct a board-led independent investigation into the allegations in the DOJ\u2019s indictment. However, the company said in its announcement the investigation has \u201cno definitive timetable\u201d and that an update would come only when the investigation was complete.\u00a0<\/p>\n
\u201cI am personally shocked and saddened\u201d<\/p>\n
Early on Tuesday as Supermicro announced its third quarter fiscal 2026 financial results, Liang tried to distance himself from Liaw, who cofounded Supermicro together with Liang and Liang\u2019s wife Sara Liu back in 1993. Liu was also not named in the indictment.\u00a0<\/p>\n
\u201cI must be clear. Supermicro is not a defendant, nor a target of a grand jury investigation, and Supermicro has zero tolerance for any employee who violates federal law and regulation,\u201d said Liang at the start of the analyst call. \u201cI am personally shocked and saddened by these alleged actions, which in no way represent the values or ethics of this company.\u201d<\/p>\n
Liang also sought to reassure analysts that Supermicro\u2019s relationships with its vendors, which include $5 trillion Nvidia, were still \u201cstrong.\u201d Following the indictment, questions were raised about Supermicro\u2019s continued access to Nvidia GPUs given the allegations.<\/p>\n
Liang said partnerships with GPU suppliers and component providers Nvidia, AMD, Intel, and Broadcom go back a long time.\u00a0<\/p>\n
\u201cWe feel our partnership [will] stay as strong, if not stronger, at least as strong as before,\u201d said Liang. \u201cWe continue to work together on lots of new projects.\u201d<\/p>\n
Chief financial officer David Weigand affirmed: \u201cOur understanding is there is no change in allocation.\u201d<\/p>\n
Liang also told analysts during the call that most customers feel \u201cpretty solid\u201d about continuing their business with Supermicro and continuing to \u201cgrow together.\u201d<\/p>\n
Supermicro\u2019s financial results saw revenue of $10.2 billion for Q3, up 123% year over year, although down 19% from last quarter. The company said the decline was the result of short-term customer delays related to data centers that weren\u2019t yet equipped with the power and networking infrastructure needed to accept server deliveries. However, Supermicro expects to recognize the deferred revenue in coming quarters.\u00a0<\/p>\n
In addition, Supermicro\u2019s gross margins\u2014a longtime pain point for investors\u2014rose to 10.1%, up from 6.4% the previous quarter. The margin change was driven by a shift in the customer mix toward enterprise buyers, said Liang, and away from a single hyperscaler that fell from 63% of revenue to 27%. Non-GAAP diluted earnings per share hit $0.84, beating the company\u2019s guidance of at least $0.60.\u00a0<\/p>\n
Critically, Supermicro also guided to $11 billion to $12.5 billion in revenue for the fourth quarter, and raised its full-year fiscal 2026 target to $38.9 billion to $40.4 billion.\u00a0\u00a0<\/p>\n
#Supermicro #CEO #indicted #employees #part #alleged #billion #chip #smuggling<\/p>\n","protected":false},"excerpt":{"rendered":"
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