(Reuters) – The U.S. Justice Department is investigating Super Micro Computer, the Wall Street Journal reported on Thursday, nearly a month after short-seller Hindenburg Research alleged “accounting manipulation” at the maker of AI servers.
Shares of Super Micro fell nearly 17% after the report.
The WSJ report, citing people familiar with the matter, said the investigation is in its early stages and that a U.S. attorney’s office recently contacted people who may have relevant information.
The prosecutor has requested information that appears to be related to a former employee who accused the company of accounting violations, the report said.
Super Micro delayed the filing of its annual report late last month because the company needed to review “its internal controls over financial reporting,” a day after Hindenburg disclosed a short position and alleged “accounting manipulation.”
The short-seller cited a three-month investigation that included interviews with former top Super Micro employees and court documents.
Hindenburg presented evidence, among other things, of undisclosed related-party transactions and failure to comply with export controls.
The company denied Hindenburg’s claims.
Super Micro declined to comment on the report on Thursday, while the Justice Department did not immediately respond to a Reuters request for comment.
A review of tender documents by Reuters earlier this year found that Chinese entities acquired high-end Nvidia chips, which are embedded in server products from several companies including Super Micro, through resellers.
The US government is cracking down on the sale of such technology to China.
Super Micro has been a big winner in the generative AI boom, as companies bet on the technology needed to power applications like ChatGPT, boosting the company’s market value from about $4.4 billion to $67 billion in March.
The rally in AI stocks has now cooled as investors realize that companies’ big investments are not paying off as quickly as expected.
(Reporting by Akash Sriram and Aditya Soni in Bengaluru; Editing by Shreya Biswas)
