Super Micro Computer, Inc. Tumbles After Report That Apple Inc. Severed Ties

Super Micro Computer, Inc. Tumbles After Report That Apple Inc. Severed Ties
Photo by kropekk_pl (Pixabay)

Apple reportedly ended its relationship with Super Micro Computer, which triggered a massive drop in the latter’s shares in late trading on Thursday. The iPhone maker was said to have ended the relationship after it discovered a potential security “vulnerability” in a data center server that Super Micro provided it.

Why Apple ended its relationship with Super Micro

Citing unnamed sources and a Super Micro executive, The Information reported that in early 2016, Apple discovered an issue with the Super Micro equipment, and by the middle of the year, it had stopped shipping equipment to the iPhone maker. In July 2016, Super Micro slashed its forecasts, resulting in a big stock drop. A few weeks later it disclosed in an earnings conference call that it had lost two large data center customers, although it didn’t name either of them.

An account of the incident by Tau Leng, Super Micro’s senior vice president of technology, indicated that Apple received bad firmware from an FTP site that it was hosting. It is possible that the site had been infiltrated, which might have compromised the server. Leng told The Information that Apple was asked to provide the version number of the firmware it downloaded after experiencing issues, but it provided an invalid number and did not give any more information to Super Micro.

John Buckingham: Busting the Myths & Seven “Valuable” Themes for 2021 [ValueWalk Webinar slides and video]

John BuckinghamJohn Buckingham's presentation titled, 'Busting the Myths & Seven "Valuable" Themes for 2021'. The webinar  for ValueWalk Premium members took place on 2/23/2021, and was followed by a Q&A. Stay tuned for our next webinar, Q4 2020 hedge fund letters, conferences and more John Buckingham Principal, Portfolio Manager, Kovitz Editor of The Prudent Speculator newsletter Read More

“Mr. Leng said Super Micro regularly provides firmware updates that data center customers like Apple can download from a private ‘FTP’ site, hosted by Super Micro. He said the firmware updates come from outside chip manufacturers–in this case, a networking chip maker that he declined to name,” reported The Information.

Apple’s version of the incident

There are chances that the servers handling Siri requests and App Store search functionality were compromised, notes The Information, citing unnamed sources. Contrary to this, an Apple spokesperson said that no bad firmware had been received, and none of its customers’ data had been stolen. The spokesperson told The Information that protecting the data, privacy and security of its customers is their top priority.

“We are constantly monitoring for any attacks on our systems, working closely with vendors and regularly checking equipment for malware.”

The exact cause that led to the end of the disagreement between Super Micro and Apple is still not clear, but since then, the iPhone maker has moved on to other server suppliers. According to Macrumors, orders from ZT have increased, and servers are being purchased from Inspur.

No posts to display