Three detained over alleged smuggling of Nvidia chips to Hong Kong

Taipei, May 22 (CNA) Three Taiwanese men were detained Thursday for allegedly forging documents to smuggle AI servers containing advanced Nvidia chips into Hong Kong and possibly China, according to the Keelung District Prosecutors Office on Thursday.

After questioning the three men overnight, prosecutors filed a motion with the Keelung District Court to detain them and hold them incommunicado, the prosecutors office said in a statement.

The court approved the motion after a hearing later Thursday, ruling that there was reason to suspect that the three men were guilty of forgery and other crimes and that they posed flight risks and could tamper with evidence or collude with witnesses if not detained.

Prosecutors said the three suspects knew that exports of high-performance artificial intelligence (AI) servers made by Super Micro Computer, Inc. (Supermicro) to China were subject to strict U.S. controls because they contained advanced chips made by Nvidia Corp.

Nevertheless, the suspects, surnamed You (游), Wang (王), and Chen (陳), allegedly sought to profit by buying dozens of AI servers in Taiwan and then shipping them by sea to Hong Kong from a port in northern Taiwan.

During that process, however, they falsified the name of the merchandise and the destination of the shipment, listing on their export declaration that they were destined for a country in Northeast Asia, the statement said.

Prosecutors said more than 10 Supermicro AI servers, valued at about NT$10 million (US$312,500) each, were shipped to Hong Kong via a third location, but they are still investigating whether the servers were later transshipped to mainland China.

Prosecutors said two of the three companies linked to the suspects were allegedly involved in the smuggling operation, and the buyers came from China, Hong Kong and Macau.

The Keelung District Prosecutors' Office on Wednesday directed the Coast Guard Administration's Keelung Reconnaissance Brigade to search 12 locations, including the suspects' residences and offices in Taipei, New Taipei, Taoyuan and Taichung.

Investigators seized 50 AI servers equipped with advanced Nvidia chips, along with other evidence, including mobile phones, computers, account books, luxury cars and NT$9 million.

The three suspects and several witnesses were also brought in for questioning, after which prosecutors filed the motion to detain the suspects.

Washington has restricted exports of certain advanced Nvidia chips to China since 2022, but such chips continue to surface in Chinese products.