A Wild Rumor Suggests That You Can Still Get NVIDIA’s H100 Chips in China From Super Micro Computer (SMCI)

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Super Micro Computer (NASDAQ: SMCI) shares continue to struggle after enduring a veritable pounding on Friday, one that was initially deemed an affinity move alongside NVIDIA’s 10 percent correction. However, a rumor is now painting a much more troubling regulatory picture for the manufacturer of high-performance servers.

Rumor: Super Micro Computer’s Dealers in China are Managing to Evade the Biden Administration’s Export Controls

As a refresher, Super Micro Computer’s biggest client is NVIDIA, and its second-biggest client is an entity that is backed by NVIDIA. However, SMCI’s 23 percent fall on Friday spurred investors to look for alternate explanations that go beyond a simple affinity move narrative.

The X account “Fabricated Knowledge” has suggested that Chinese consumers can still lay their hands on NVIDIA’s H100 chips via Super Micro Computer’s dealers. Bear in mind that these chips fall under the Biden administration’s export restrictions vis-a-vis China, potentially opening up the high-performance server manufacturer to punitive enforcement action.

Our own search on Baidu has yielded a number of posts, including this one, which promises a large shipment of H100 chips “arriving in Hong Kong in two weeks, and can be picked up in Shenzhen or Zhengzhou.” This post was authored on the 12th of April, 2024. The post’s data sheet also includes SMCI’s logo.

A post on ZOL, authored on the 12th of April, 2024, also references a promotion of Super Micro Computer’s H100 chips:

“Promotion Supermicro H100 Server NVIDIA H100 SXM5 8 GPU Xeon AI Server, Shenzhen Merchants “Shenzhen Huayang Software Technology Co., Ltd.” in Shenzhen, China provide special promotions, and you can directly consult (contact number: 13530888867 WeChat with the same number) to buy H100 servers.”

Of course, readers should note that it is highly unlikely that SMCI is deliberately facilitating the violation of the Biden administration’s export controls. However, the company’s oversight of its dealer network appears riddled with potholes.

The S&P 500 Effect

We noted in a previous post that Super Micro Computer was quite likely to underperform its peers in the months ahead due to the so-called S&P 500 inclusion effect:

“According to Research Affiliates, while S&P 500 deletions underperform additions by an average of 6.2 percent between the announcement date and the actual date of rebalancing, they tend to beat the market by an average of 20 percent over the next 12 months following the rebalancing event.”

Given the ongoing weakness in SMCI shares, this effect appears to be at its most potent stage right now.

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