SMCI, 'hindered' by controversy over alleged violation of Taiwan export regulations..."Revenue increased but fell short of projections"

▲ SMCI, Taiwan, Artificial Intelligence (AI) chip, stock price drop/AI generated image

Investor sentiment has once again frozen as SMCI (Super Micro Computer, SMCI) became embroiled in allegations of violating Taiwan's AI chip export regulations. Despite a sharp increase in third-quarter revenue and a large order backlog, investigation risks and the burden of a $7 billion new share issuance are weighing down the stock price.

According to FXLeaders, a financial media outlet, on July 2 (local time), SMCI's stock price continued to weaken in the wake of an investigation into alleged illegal chip exports to China. Taiwanese police have launched an investigation to determine whether SMCI sent high-performance NVIDIA (NVDA) AI chips and servers to China.

Taiwanese police raided SMCI's Taiwan office and detained some employees, including managerial staff. The U.S. government restricts the sale of advanced AI chips to China, and investors are concerned that this investigation could lead to fines, business restrictions, and operational disruptions. The company stated that it is fully cooperating with the police investigation.

In terms of performance alone, growth remains strong. SMCI recorded $10.2 billion in third-quarter revenue, a 123% increase compared to the same period last year. While AI server demand drove revenue expansion, revenue fell short of the company's own projections and also decreased from the previous quarter.

The company projected total revenue for fiscal year 2026 to be at least $36 billion. The secured order volume also amounts to approximately $39 billion, leaving expectations for future growth. However, with investigation risks overshadowing performance momentum, the market is reacting more sensitively to the possibility of regulatory impact than to short-term growth.

Stock price pressure was also compounded by the capital increase issue. Last month, SMCI announced plans to raise $7 billion through a new share issuance to procure chips and components necessary for AI server production. As concerns about dilution of existing shareholders' stakes grew, selling pressure intensified, and the media reported that the stock price showed weakness at around $27.65.

[Article Summary]

-SMCI's stock price is under pressure due to the Taiwanese police investigation into alleged AI chip exports to China.

-Third-quarter revenue was $10.2 billion, a 123% increase year-over-year, and the order backlog reached approximately $39 billion.

-However, investigation risks and concerns about equity dilution from the $7 billion new share issuance are dampening expectations for performance growth.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*