As the US tightens controls on advanced AI chip exports, smuggling schemes are surfacing across the AI server supply chain, driven by soaring Chinese demand for AI servers from buyers like Alibaba and Tencent willing to pay almost any price. Supermicro was investigated in the first half of 2026, with executives and employees allegedly bypassing US export controls to divert restricted AI servers and technology to China. Taiwan's Albatron was also reported to be involved, and the case has since escalated: Keelung prosecutors detained Albatron Technology general manager Kevin Lu on Tuesday on suspicion of smuggling Supermicro AI servers to restricted markets.
The detention follows a May 20 seizure in which investigators recovered 50 Supermicro servers — equipped with Nvidia GB300 chips and purchased with pooled capital of NT$700 million (US$22 million) — from warehouse facilities in Keelung and Neihu before the hardware could be shipped out, along with more than NT$9 million in cash. Prosecutors traced the supply chain upstream to Albatron; Lu was detained Tuesday evening after a court accepted the argument that he posed a risk of evidence tampering, and has been suspended pending the investigation, with Chiu Chen-chen named acting GM.
Albatron, a Taiwan-listed distributor and authorized Supermicro channel partner, said in its Tuesday disclosure that prosecutors and investigators searched its offices and that it is fully cooperating, adding that operations remain normal, with no material impact on finances or business. The detention comes weeks after a sharp revenue spike: Albatron's monthly revenue peaked at NT$3.26 billion in March 2026, a 547% year-on-year increase.
The price gap between international and Chinese markets remains the core incentive behind such cases: even as Washington keeps tightening chip export controls, demand for Nvidia AI servers in China stays strong, making smuggling and re-routing through third locations increasingly attractive.
Chinese buyers pay double, and then some
A supply-chain source said Nvidia's latest-generation AI servers fetch nearly double international prices on China's black market, with individual deals often worth hundreds of millions of NT dollars. A case in point: a Vera Rubin platform system scheduled for shipment in September 2026 is expected to cost about US$8 million overseas — but if it reaches China, the transaction price could exceed NT$500 million.
Nvidia's paper trail gets longer
The source said Nvidia maintains exceptionally tight control over customers and its supply chain. Amid the US-China conflict, the company has built a comprehensive shipment review system for AI servers equipped with advanced GPUs, requiring all partners to complete due diligence on the end user, funding source, data-center location, and network architecture before submitting formal purchase orders, and to send the full package to Nvidia for review. This also reflects the US government's tighter regulation of AI computing exports, extending oversight from chips to full server systems.
Nvidia's full review process requires at least 14 documents and procedures, including a due diligence report, customer and end-user background checks, on-site visits, Nvidia executive approval, credit checks and funding-source verification, a required deposit from new customers, data-center agreements, data-center declarations, site inspections, delivery-address confirmation, subscriber lists, network architecture, procurement details, and PO/SO and incoterms confirmation.
Under heightened US monitoring, Nvidia and its partners have built a compliance review system far stricter than that used for ordinary IT equipment, reflecting AI servers' status as strategic products subject to heavy national-security and export-control oversight. Yet as smuggling cases keep surfacing, how well Nvidia's defenses hold up while it sustains high growth and profitability remains an open question.
Article translated by Charlene Chen and edited by Jerry Chen
