Supermicro Under Fire: DOJ Launches Probe into Tech Giant’s Alleged False Reporting of NVIDIA Shipments

Supermicro Computer (SMCI) is now the subject of an investigation by the U.S. Department of Justice as delays in filing its annual report continue. The background to this investigation is a detailed report by Hindenburg Research, which was released in August this year, accusing SMCI’s sales team of engaging in watering-down behavior in the sales channel, and deliberately conducting partial shipments to inflate sales when sales targets were not met. Volume.

In addition, SMCI paid a $17.5 million settlement after being charged by the Securities and Exchange Commission (SEC) in 2020 for “widespread accounting irregularities.” However, the company rehired the top executive responsible for the violations within three months and was again sued in April for similar revenue recognition misconduct. SMCI is also accused of paying nearly $1 billion to non-independent third-party vendors over the past three years, including Ablecom and Compuware. Faced with such serious accusations, SMCI announced after the end of its fiscal year in late June 2024 that it would delay filing its annual report on Form 10-K to conduct a comprehensive internal review.

Although SMCI claimed that the internal review would not result in “any material changes” to its fourth quarter or full-year fiscal 2024 financial results, the delay triggered the threat of potential SEC fines and exposed the company to the Nasdaq exchange compliance issues. Notably, SMCI is not only NVIDIA’s third-largest customer, but its largest customer is also an NVIDIA-backed entity. This chain of events has caused widespread concern among investors, and the stock market reaction to SMCI has been relatively volatile.