Supermicro, a high-density servers and storage equipment manufacturer, has emerged as one of the best-performing stocks in the past year, particularly in the field of artificial intelligence (AI). With a staggering 585 percent surge in its stock price, Supermicro has capitalized on the growing demand for AI solutions as its hardware excels in fast response times and handling large volumes of data required for training AI models.
Since the start of 2023, Supermicro’s market valuation has skyrocketed from just under $5 billion to an impressive $27.5 billion. The company’s success has even outpaced popular tech stocks like Nvidia, a renowned GPU and AI chip maker. Supermicro’s earning reports have consistently sent shockwaves across Wall Street, solidifying its position in the AI market.
The story of Supermicro began in 1993 when its founder, Mr. Liang, decided to start his own business in Silicon Valley alongside his wife, Sara Liu. Their venture focused on developing innovative server motherboards capable of hosting multiple CPUs. This forward-thinking approach caught the attention of the tech industry as early motherboards could only support one CPU. The introduction of graphics processing units (GPUs) further enhanced the computing power of CPUs.
In 2007, Supermicro raised funds through an initial public offering (IPO), generating $64 million. However, the IPO price fell short of initial expectations. Despite this setback, the company continued to thrive, expanding its operations in Europe and investing in new production facilities.
Nevertheless, Supermicro faced challenges along the way. In 2018, Mr. Liang borrowed a significant amount of money to repay margin loans secured by the company’s stock. This decision led to Supermicro’s suspension from stock market trading and a decline in its stock value.
Controversies surrounding Supermicro also made headlines. Bloomberg Businessweek reported that China’s People’s Liberation Army forced Supermicro’s Chinese subcontractors to add microchips with hardware backdoors to their servers. These allegations implicated Supermicro in providing compromised servers to U.S. government agencies and major tech companies. Supermicro, Apple, and Amazon vehemently denied these claims, stating that no evidence of hardware backdoors was found. However, software vulnerabilities were discovered in Supermicro’s products, leading to actions by Facebook and other companies.
In recent years, Supermicro has faced further scrutiny for its associations. A joint venture with China’s Nanjing Fiberhome Telecommunications Technology called Super Micro Computer BV in the Netherlands won a contract to provide servers for public security purposes to China’s Xinjiang Production and Construction Corps. This raised concerns due to the U.S. government’s blacklisting of Nanjing Fiberhome Telecommunications Technology over its alleged involvement in human rights abuses against Uyghurs in Xinjiang.
Additional accusations emerged in 2021, as two Russian dissident writers accused Supermicro and Lenovo Group of providing servers to the Moscow Control Center for network censorship. Supermicro responded by asserting its compliance with applicable laws and regulations, emphasizing its commitment to human rights.
Despite these controversies, Supermicro’s performance in the AI market remains strong. Its hardware’s ability to handle massive amounts of data continues to attract customers, contributing to its impressive growth and market valuation.
Supermicro’s journey in the tech industry showcases both success and challenges. As the demand for AI solutions continues to grow, the company’s innovative hardware and ability to adapt to market trends position it as a leading player. However, addressing controversies and maintaining transparency is crucial to sustaining Supermicro’s success in the AI market.
