Super Micro Moving Manufacturing Outside China to Allay Spyware Fears

[btarunr]

Motherboard manufacturer Super Micro is moving manufacturing completely outside China to allay fears from customers on spyware implanted by China. Bloomberg in October 2018 put out a sensational article alleging that Super Micro, which specializes in server motherboards bought in bulk by data-centers and cloud companies, contain spyware by the Chinese government designed to spy on US enterprises. Super Micro was quick to refute the article as baseless, but by then the damage to its reputation was done. Faced with declining sales by as much as 10 percent despite rapid industrial CAGR growth, the company is now forced to relocate manufacturing outside China not just to allay these fears, but perhaps also to reduce its import tariff burden imposed by the US government on a spectrum of electronics goods manufactured in China.

China had a manufacturing strangehold on server motherboard manufacturing, amounting to 90 percent of server motherboards shipped in 2017. In 2018, however, with the the US-China trade-war underway, that figure dropped like a rock to just 50 percent, a dramatic fall for just one year. Server component manufacturers are relocating to other countries, such as Taiwan, Vietnam, and Malaysia. Super Micro is relocating to Taiwan, with a new factory set up in Taoyuan at a cost of $65 million.



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[R-T-B]

That bloomberg article still stinks. I can only theorize why it was written, but what they claimed was pretty damn impossible simply due to the supposed complexity of the chip, and it's size. Just not feasible.

 

[Assimilator]

Despite the fact that the "spyware" allegations remain completely unproven, so-called news sites keep associating SM with them. The real reason is as stated later in the article, but I guess "Super Micro moves manufacturing offshore like every other company affected by Drumpf's tariffs" isn't nearly as catchy a headline.

That bloomberg article still stinks. I can only theorize why it was written, but what they claimed was pretty damn impossible simply due to the supposed complexity of the chip, and it's size. Just not feasible.

I'm most surprised by the fact that SM hasn't sued Bloomberg for reputational damage. 10% loss in sales due to what amounts to baseless allegations isn't something I'd just let go, personally.

 

[silentbogo]

That bloomberg article still stinks. I can only theorize why it was written, but what they claimed was pretty damn impossible simply due to the supposed complexity of the chip, and it's size. Just not feasible.

Cause someone wanted to spread the fear of "Evil Communist China", or maybe pull off the same trick that softbank did w/ NVidia stock.
The day that article got traction - I knew it was bogus and had some kind of agenda behind it.
...and they still haven't retracted the story, even though zero evidence has turned up. The whole thing is based on some variations of "anonymous sources from a large company" or pure speculation.

 

[TheLostSwede]

Despite the fact that the "spyware" allegations remain completely unproven, so-called news sites keep associating SM with them. The real reason is as stated later in the article, but I guess "Super Micro moves manufacturing offshore like every other company affected by Drumpf's tariffs" isn't nearly as catchy a headline.

It has nothing to do with Agent Orange. SuperMicro used to make everything in Taiwan and they're moving it back to Taiwan. Taiwan is considered a safe and reliable place to make hardware. On top of that, a lot of Taiwanese companies are pulling out of China, partially due to increasing costs, partially due to the political situation and bullying by China.

Cause someone wanted to spread the fear of "Evil Communist China", or maybe pull off the same trick that softbank did w/ NVidia stock.
The day that article got traction - I knew it was bogus and had some kind of agenda behind it.
...and they still haven't retracted the story, even though zero evidence has turned up. The whole thing is based on some variations of "anonymous sources from a large company" or pure speculation.

Communist China as a government is evil, look at how they treat their people, business partners and neighbors.

 

[Chomiq]

It has nothing to do with Agent Orange.

He called himself "The Tariff Man", it has everything to do with him seeing how this comes day after he announced further increase in tariffs for items manufactured in China.

For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday

- that's his tweet from day before.

Pretty sure motherboards are "high tech".

 

[silentbogo]

Communist China as a government is evil, look at how they treat their people, business partners and neighbors.

It doesn't matter in this context, since the agenda of chinese communist party has nothing to do with Supermicro and their move to Taiwan.
Howerver, being delisted on NASDAQ, getting blasted by increasing import tariffs, and losing lots of money after being falsely accused of having a science fiction-like supply chain infiltration... all within a year -- does.

 

[klf]

https://www.servethehome.com/investigating-implausible-bloomberg-supermicro-stories/

These Bloomberg guys are shady. I know this isn’t STH’s focus, but you’re doing a great job on this line and you’re the server expert. That first page was completely damning. There’s no way you can look at their statements dissected like that and say their story is completely true.
If I wanted to read a fictional novel, the Bloomberg guys are better writers than you so there’s that.

 

[Tsukiyomi91]

it's not a spyware problem from China when your own country has been spying on you since the day you were born.

 

[Crackong]

Communist China as a government is evil, look at how they treat their people, business partners and neighbors.

Look how they treated their people in stock market today.
They simply blocked every news article about the 25% tariff.
Gov personnel got out quickly.
Civilians had no idea their stock would crumble in minutes.
Fair trade is a joke in China.

 

[SoNic67]

All said and done, US needs to rely on manufacturers of high tech equipment that are not in a country that can be a military opponent. Idealy all the strategic goods production should be done in US.
China building up their military capabilities, without being in danger of anything, clrealy expanding in the China Sea and being more "vocal" about Taiwan, brought that to themselves.
Also, an article on Bloomberg cannot describe EXACTLY what the Inteligence Community knows about the spying, for very good reasons. Amazon, Apple, Google not buying those server motherboards made in China anymore tells more than anything.

 

[the54thvoid]

Does China spy? Yes.
Does USA & allies spy? Yes.

Let's not think that one superpower is doing all the bad stuff. If you want a real hint as to where the power is shifting, look to Russia where the new foreign company server rules are in place and the state is required to monitor them. Add in a dash of state-sponsored cyber activity and you have the perfect, walled garden threat to all. Russia is making its move to net independence (also called complete control) and cyber warfare on a globally intrusive scale.

As for moving stuff to Taiwan? That's the straw on the camels back for China. I wonder how long before it simply* takes it back?

*Simply, obviously, is a little light but China views Taiwan as China.

 

[SoNic67]

Every military in the history "spied". It can mean the difference between victory and defeat, it can save many lives for the country. British spied on Nazi Germany and decoded Enigma messages. Per some guys here, that would be a bad thing.
Chinese spying is good for them. Bad for everyone else.
This site is not in China, hence... we don't agree with the Chinese spying. I am less concerned with US spying on me, I have nothing to hide from US government and they are absolutelly not interested in what I type here. It's still one of the few (the only?) countries in the world with freedom of speech, no matter what Facebook, Twitter and such want us to became.
Those are just scare tactics used by Chinese bots to shift the blame.

 

[Deleted member 158293]

This article reads like propaganda.

 

[Assimilator]

I am less concerned with US spying on me, I have nothing to hide from US government and they are absolutelly not interested in what I type here.

If you only have a problem with pervasive surveillance if it's not your government doing it, you are hopelessly naive.

 

[BorgOvermind]

Super Micro is relocating to Taiwan.
Next move: US taxing Taiwan.

 

[Chomiq]

Super Micro is relocating to Taiwan.
Next move: US taxing Taiwan.

Well technically it's Republic of China, Taiwan so all the US needs is POTUS misreading his latest economy report. Assuming he reads them at all (bullet points y'all).

 

[Mescalamba]

Well, it could increase quality, which aint bad.

 

[SoNic67]

If you only have a problem with pervasive surveillance if it's not your government doing it, you are hopelessly naive.

So you think that somebody at NSA sits in a cubicle and pays attention to whatever I do online??? That's what is truly naive.
The only surveillance is done by Facebook, Twitter, Instagram, free email accounts, and we all agreed to that. Well, almost all, I don't have a Facebook or twitter account.

PS: It's all done to be sold for advertising, witch to me is another big fallacy - the advertising doesn't work like the ad companies try to tell everyone it does. It's just a redistribution of wealth mechanism... from companies that make usable products to the Silicon Valley that does... nothing.

 

[TheLostSwede]

He called himself "The Tariff Man", it has everything to do with him seeing how this comes day after he announced further increase in tariffs for items manufactured in China.

- that's his tweet from day before.

Pretty sure motherboards are "high tech".

The new might've, but this has been long time happening and they are one of many companies moving their business back to Taiwan. This was not something they decided based on Agent Orange's new tariff. But please, believe whatever you want, if it makes you happy.

As for moving stuff to Taiwan? That's the straw on the camels back for China. I wonder how long before it simply* takes it back?

*Simply, obviously, is a little light but China views Taiwan as China.

You clearly have a very limited understanding of a VERY complex situation. Maybe you should spend some time in Taiwan to understand what's going on a bit better.

Super Micro is relocating to Taiwan.
Next move: US taxing Taiwan.

Not happening, as they have trade deals in place and they're continually negotiating new ones. The US is the biggest arms supplier to Taiwan, so dream on.

 

[eidairaman1]

Damage has already been done unfortunately.

 

[the54thvoid]

You clearly have a very limited understanding of a VERY complex situation. Maybe you should spend some time in Taiwan to understand what's going on a bit better.

I think the sarcasm was lost on you. But China does view Taiwan as China. We call it Taiwan but it is the Republic of China. And the PRC (as such) views Taiwan as part of China under the whole 'one-nation' concept. I know the basics of its history. I know it was the Commies winning over the KMT that made the ruling party flee to Taipei. And FTR, nothing is EVER simple in geographical politics.

 

[R-T-B]

So you think that somebody at NSA sits in a cubicle and pays attention to whatever I do online???

No, privacy advocates don't pretend that. They argue that that isn't the point, and doesn't matter. The information simply shouldn't be compiled in the first place against "assumed innocent" civilians, is the arguement. It gives the government a power it should not have over the average individual.

Silicon Valley that does... nothing.

Wow. Serious question, do you code your own OS/Browser to get online. How'd you get to this website? What enabled that?

I sometimes wonder how people with views like that end up on a technology enthusiast website.

Every military in the history "spied". It can mean the difference between victory and defeat, it can save many lives for the country. British spied on Nazi Germany and decoded Enigma messages. Per some guys here, that would be a bad thing.

Uh, nope. Because military spying != civilian spying.

If you have nothing to hide you should still be an advocate for civilian privacy. As I said earlier, nothing irks a privacy advocate more than the " I got nothing to hide" logic fallacy. It's a cold-hearted liberty killer.

That's way OT for this, but I can't just leave crap like that uncontested.

 

[TheLostSwede]

I think the sarcasm was lost on you. But China does view Taiwan as China. We call it Taiwan but it is the Republic of China. And the PRC (as such) views Taiwan as part of China under the whole 'one-nation' concept. I know the basics of its history. I know it was the Commies winning over the KMT that made the ruling party flee to Taipei. And FTR, nothing is EVER simple in geographical politics.

China views most of the worlds as their property. Let's say hypothetically that they'd take over Taiwan, then they'd continue with Japan and most of South East Asia. They always have some convenient excuse as to why a certain piece of land or sea belongs to them, such as this https://en.wikipedia.org/wiki/Nine-Dash_Line

I also know very well what Taiwan is and isn't, since I've spent well over a decade living on the island. One part (mostly the KMT) want reunion of some kind and the other part (DPP and others) want Taiwan to declare independence from something, but it's uncertain as to what this is. Technically speaking, the ROC is an invading hostile force in Taiwan that took the island by force. Taiwan has never been under Chinese rule. Parts of the island, maybe, but never the entire island, just as it was never under western rule at any point, besides small little coastal forts. The only nation that has ruled all of Taiwan is Japan and they killed a lot of the native population to get to there, something the ROC decided to copy in many ways, for example https://en.wikipedia.org/wiki/White_Terror_(Taiwan)
Small island, lost of really nasty history.

I just have a hard time with people making comments about things they seemingly know so little about, especially as they live in some other part of the world and don't have to worry about things like China maybe invading one day.

 

[eidairaman1]

China views most of the worlds as their property. Let's say hypothetically that they'd take over Taiwan, then they'd continue with Japan and most of South East Asia. They always have some convenient excuse as to why a certain piece of land or sea belongs to them, such as this https://en.wikipedia.org/wiki/Nine-Dash_Line

I also know very well what Taiwan is and isn't, since I've spent well over a decade living on the island. One part (mostly the KMT) want reunion of some kind and the other part (DPP and others) want Taiwan to declare independence from something, but it's uncertain as to what this is. Technically speaking, the ROC is an invading hostile force in Taiwan that took the island by force. Taiwan has never been under Chinese rule. Parts of the island, maybe, but never the entire island, just as it was never under western rule at any point, besides small little coastal forts. The only nation that has ruled all of Taiwan is Japan and they killed a lot of the native population to get to there, something the ROC decided to copy in many ways, for example https://en.wikipedia.org/wiki/White_Terror_(Taiwan)
Small island, lost of really nasty history.

I just had a hard time with people making comments about things they seemingly know so little about, especially as they live in some other part of the world and don't have to worry about things like China maybe invading one day.

If china Could they would take over the entire Korean Peninsula