Shares of Nvidia, Super Micro Computer, and Dell Technologies took a steep dive after Singaporean authorities launched an investigation into alleged fraudulent shipments of AI servers containing advanced Nvidia chips. The probe has raised concerns over potential violations of U.S. export controls, particularly if the technology was diverted to restricted markets like China.
Stock Market Fallout
The market reacted swiftly to the news, with investors pulling back on major AI hardware stocks.
- Nvidia (NVDA): The stock tumbled 8.7%, closing at $114.06, its lowest level since September.
- Super Micro Computer (SMCI): Shares dropped 13%, marking a 29% decline over just three days.
- Dell Technologies (DELL): The company’s stock fell 7%, hitting its lowest point since August.
What Sparked the Investigation?
Singaporean authorities have arrested and charged three individuals—two Singaporean nationals and one Chinese citizen—in connection with the illegal resale of AI servers that contained Nvidia chips.
The servers were originally shipped to Malaysia by Dell and Super Micro, raising suspicions about their true final destination. The primary concern is whether the high-performance chips were then redirected to China, potentially violating U.S. trade restrictions.
Singapore’s Minister for Home Affairs and Law, K. Shanmugam, confirmed that authorities are investigating whether Malaysia was the intended recipient or simply a transit point for the restricted technology.
U.S. Trade Concerns and Market Impact
The incident has intensified fears over the global enforcement of U.S. export controls. As Washington ramps up efforts to restrict China’s access to cutting-edge AI technology, this case highlights the challenges in monitoring and preventing illegal trade routes.
The broader tech market also felt the shockwave, with investors worried about increased regulatory scrutiny and potential tighter restrictions on AI hardware exports.
Company Responses
- Dell has reaffirmed that it follows strict trade compliance protocols and will take action if violations are found.
- Super Micro stated it is conducting an internal review and remains compliant with U.S. export laws.
- Nvidia has not commented on the ongoing investigation.
What’s Next?
As the Singaporean government continues its probe, further revelations could impact global chip supply chains and U.S.-China trade relations. Investors are now closely watching for any potential regulatory fallout that could impact the AI hardware market.
