Dive Brief:
- AI-server maker Super Micro Computer said the “material weaknesses” in internal control over financial reporting “remain unremediated” as of March 31, according to the company’s latest 10-Q filed Monday. The weaknesses were first identified in February 2025, and the company said it will continue to take actions to improve its internal and disclosure controls until the remediation effort is complete.
- Those efforts include improving its enterprise resource planning system, using checklists to improve accuracy and adding controls to its close process for such issues as related party transactions.
- “We believe the above actions will be effective in remediating the material weaknesses described above, and we will continue to devote significant time and attention to these remedial efforts,” Super Micro said in the filing. “However, the material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded after completion of appropriate testing that these controls are operating effectively.”
Dive Insight:
The San Jose, California-based company in recent years has elicited AI-driven investor enthusiasm while navigating thorny accounting and financial reporting problems. A report from the now defunct short-seller Hindenburg Research in 2024 found “glaring accounting red flags” and undisclosed related party transactions.
The update on the remediation comes on the heels of a leadership shakeup. In March, Super Micro’s co-founder Yih-Shyan “Wally” Liaw and two other individuals were charged in connection with a scheme to “secretly divert billions of dollars worth of servers with cutting edge U.S. artificial intelligence technology to China.” On March 20, Liaw resigned from the board, and the company appointed DeAnna Luna as acting chief compliance officer.
The internal control problem Super Micro seeks to remediate was flagged last year in a delayed 10-K, which included a report from the company’s registered public accounting firm BDO. The auditor at the time found that the material conformed with generally accepted accounting principles. Still, BDO gave an “adverse opinion” regarding the company’s internal control over financial reporting, CFO Dive previously reported.
Last week the company reported its unaudited net income rose to $483 million in the fiscal third quarter ended March 31, up from $109 million in the year-earlier period.
Super Micro's “transformation into a total datacenter infrastructure provider is accelerating,” said Charles Liang, president and CEO of Super Micro in a statement included in the release.
A company spokesperson declined to comment.
