Key Highlights
- Shares of SMCI closed at $20.53 on March 20, down 33%, following criminal charges against three company-affiliated individuals, including co-founder Wally Liaw
- Federal prosecutors allege Liaw participated in smuggling approximately $2.5B worth of Nvidia-powered AI servers to China in violation of export controls
- The board accepted Liaw’s immediate resignation; DeAnna Luna assumed the role of acting Chief Compliance Officer
- Northland Securities analyst Nehal Chokshi moved SMCI to Hold and reduced his price target 65%, dropping it from $63 to $22
- Technical indicators show SMCI’s 14-day RSI at approximately 24, suggesting oversold territory, while short interest stands at 14.7%
Super Micro Computer (SMCI) experienced a severe downturn this week. Shares plummeted 33% on March 20 following the unsealing of federal criminal charges against three individuals connected to the company.
Super Micro Computer, Inc., SMCI
The arrested individuals included co-founder Yih-Shyan “Wally” Liaw, who was taken into custody by U.S. Justice Department officials. His resignation from the board took effect immediately after the arrest.
Federal prosecutors allege the group illegally exported around $2.5 billion in Nvidia-powered AI servers to China, circumventing U.S. export control regulations. According to charging documents, the servers were first sent to a Southeast Asian entity for repackaging before final delivery to Chinese destinations.
Super Micro was not designated as a defendant in the case. In response to the allegations, the company terminated one contractor’s relationship and placed two employees on suspension.
Executive Restructuring
SMCI shares settled at $20.53 on March 20, a steep decline from levels exceeding $100 seen throughout 2024. Pre-market trading on Monday showed the stock hovering near that closing price, initially falling 0.88% before recovering to slightly positive territory.
With Liaw’s exit, the board composition now consists of eight directors. The company promoted DeAnna Luna to acting Chief Compliance Officer. Luna became part of SMCI in 2024 and contributes more than two decades of trade compliance expertise, gained through previous positions at Intel and Teledyne Technologies.
Management also revealed a structural change separating the Chief Compliance Officer and Chief Financial Officer positions. The company has remained silent on the specific reasons behind Liaw’s departure and whether plans exist to appoint a replacement board member.
Wall Street Reactions
On Monday, Northland Securities analyst Nehal Chokshi shifted his rating on SMCI from Buy to Hold. His price target underwent a dramatic 65% reduction, falling from $63 to $22.
Chokshi acknowledged the CCO/CFO separation as a constructive step but characterized the move as reactive in nature. He projected flat revenue and earnings trajectories until the company addresses the dual Chairman and CEO structure, with both positions currently occupied by Charles Liang.
Argus followed suit with a downgrade to Hold after the criminal charges surfaced. TipRanks consensus rating reflects Hold, comprising two Buy recommendations, eight Hold positions, and three Sell ratings. The aggregated price target reaches $34.33.
These developments compound an already challenging period for Super Micro Computer. Ernst & Young, the company’s auditor, abruptly severed the relationship in late 2024 citing independence concerns between board oversight and management operations. The company has additionally struggled with delayed regulatory submissions and received Nasdaq compliance notifications during this timeframe.
From a technical perspective, the chart presents concerning signals. The 14-day RSI reading hovers around 24, indicating oversold territory while reflecting sustained downward pressure. The stock currently trades beneath all primary moving averages, including the 50-day benchmark, establishing a clear downward trend. Short interest data reveals approximately 14.7% of shares sold short.
The consensus analyst price target of $34.33 suggests potential upside of 67.2% from present levels, although the trajectory toward that valuation remains uncertain considering the active legal matters.
