US Justice Department Investigates Super Micro Computer, Reports WSJ

The U.S. Department of Justice is investigating Super Micro Computer, according to a report by the Wall Street Journal. This follows a recent claim by short-seller Hindenburg Research, which alleged the company was involved in “accounting manipulation.” As a result of the report, Super Micro’s stock dropped by approximately 12%.

The report indicated that the investigation is still in its early stages, with a prosecutor from a U.S. attorney’s office reaching out to individuals who may have pertinent information. The inquiry appears to be linked to a former employee who made accusations regarding accounting violations within the company.

In late September, Super Micro postponed the filing of its annual report, citing the need to evaluate “its internal controls over financial reporting.” This delay came shortly after Hindenburg disclosed its short position and allegations of manipulation.

Hindenburg’s claims are rooted in a three-month investigation that involved interviews with former senior employees and examination of legal documents. The allegations include undisclosed related-party transactions and noncompliance with export controls, among other issues, which the company has denied.

On Thursday, Super Micro did not provide a comment regarding the investigation, while the DOJ mentioned it cannot confirm or deny the existence of such an inquiry.

Earlier this year, a review of tender documents revealed that Chinese entities acquired high-end Nvidia chips embedded in server products from various companies, including Super Micro, through resellers. The U.S. government has been intensifying its scrutiny on the sale of advanced technology to China.

Super Micro has experienced substantial growth amid the generative AI boom, with its market value soaring from approximately $4.4 billion in March to $67 billion, as businesses increasingly invest in technology that powers applications like ChatGPT. However, the surge in AI stocks has recently waned as investors recognized that the returns on these significant investments might take longer to materialize than initially anticipated.