Key insights
- Supermicro faces headwinds from management arrests related to China exports and Oracle backing out of a $1.1-1.4 billion agreement. Coupled with geopolitical tensions regarding Taiwan, the author speculates a potential acquisition or restructuring, possibly by Elliot Management. This news exerts a slightly negative influence on US equities due to uncertainty surrounding a key technology manufacturer.
Supermicro manufactures and integrates full rack-scale systems in the US, Taiwan, Netherlands, and Malaysia.
Management have recently been arrested and charged with exporting restricted equipment to China, the second such time they have gotten sideways with the law, and all the way to the top of the corporate structure.
Importantly for our purposes, they have local (to the USA) production assets and experience with edge technology.
Today Oracle backed out of an agreement worth $1.1-1.4 billion.
https://uk.finance.yahoo.com/news/super-micro-tumbles-10-reported-120410594.html
In the last few days premier Xi re-asserted that the Taiwan takeover was only a matter of time.
SMCI has not given granulars on manufacturing mix across the 4 assembly sites.
I suspect SMCI will get sold in the near future (maybe even for operating parts), but do not have a valuation in mind - yet.
It feels like an Eliott Management take-under and spin-off situation.