Taiwan raids tech firms in China AI chip smuggling probe

Taiwan raids tech firms in China AI chip smuggling probe TAIPEI: Taiwanese investigators have raided the Taiwan offices of United States company Super Micro Computer and two other tech firms, a prosecutor said on Tuesday (Jun 30), as part of an expanded probe into the alleged smuggling of Nvidia artificial intelligence chips to China. Prosecutors said in May they were investigating the shipment of "high-end" AI servers containing advanced Nvidia chips to China, Macau and Hong Kong, in violation of US export controls. Nine people are now under investigation, up from three previously, Huang Sheng, head prosecutor in the Keelung Prosecutors Office, told AFP. They are accused of forging documents so they could ship roughly 50 servers made by Super Micro Computer to China. Some of the servers were cleared by Taiwan customs and sent to China via Japan, an official previously told AFP on the condition of anonymity. Twelve sites were raided on Monday as part of the probe, the prosecutors' office said in a statement. They included the homes of six people and offices of the companies they worked for - Nasdaq-listed Super Micro Computer and Taiwan-listed firms Albatron Technology and Chief Telecom. The US restricts the export of its most cutting-edge AI chips to China, partly over concerns the technology could be used by Beijing's military. But it is not a criminal offence in Taiwan - a situation lawmakers and experts say needs to change - with Taiwanese prosecutors relying on other laws to go after offenders. Lawmaker Chung Chia-pin, who belongs to President Lai Ching-te's Democratic Progressive Party (DPP), plans to propose an amendment to the Foreign Trade Act to include a "mainland China semiconductor chip clause" that would make exporting chips there illegal. Chung told AFP on Tuesday that a loophole in the law was created under former president Ma Ying-jeou, who belongs to the Kuomintang party, and successive DPP-led governments have failed to close it. SHARES FALL SHARPLY Top-end chips made by US titan Nvidia - the world's most valuable company - are used to train and run AI systems. In response to Washington's export restrictions, China has been accelerating efforts to develop its own AI chips and break away from reliance on US hardware. This month, Taiwanese Deputy Economic Affairs Minister Ho Chin-tsang said Taiwan and the United States "will work to implement our shared export control goals", but the government has not provided details. Chris McGuire, an expert on China and AI at the US-based Council on Foreign Relations, said chip smuggling was a "really significant problem" in Taiwan and Southeast Asia. "It's really, really important that allies align with the US on all of these policies and also legal authorities," McGuire, who worked at the National Security Council under former US President Joe Biden, told a forum in Taipei this month. "It's not a criminal violation in Taiwan to export AI chips to China, obviously it is under US law, but it's not under Taiwanese law. That needs to change, right?" Super Micro Computer, Albatron Technology and Chief Telecom have said separately they are cooperating with investigators. Their shares have seen sharp falls this week. Prosecutors say it is too early to know if the case is linked to a Nvidia chip smuggling case involving Super Micro Computer employees in the US. A US indictment unsealed in March showed employees of the company allegedly raked in billions of dollars by diverting Nvidia AI chips to China in breach of export controls.