U.S. authorities have covertly embedded location tracking devices in select shipments of advanced artificial intelligence chips to detect and prevent their illegal diversion to China, according to two people with direct knowledge of the matter.
The tactic, previously unreported, targets high-risk shipments under investigation for potential violations of American export controls. It underscores the lengths Washington is going to enforce restrictions on China’s access to cutting-edge semiconductors, even as the Trump administration has explored easing some curbs.
Sources familiar with the operations said the trackers, sometimes hidden inside packaging or servers themselves, help build criminal cases against individuals and companies that profit from circumventing U.S. export rules.
The devices have been used in shipments from server makers such as Dell and Super Micro, which include chips from Nvidia and AMD. In one 2024 case, trackers were found both in shipping boxes and inside servers containing Nvidia processors.
The Bureau of Industry and Security, which oversees export controls, is typically involved in such operations, with support from Homeland Security Investigations and the FBI.
The agencies declined to comment, while Dell said it was “not aware” of such a U.S. government initiative, and Super Micro would not discuss its security practices. Nvidia and AMD did not provide responses.
The U.S., which dominates the global AI chip supply chain, began restricting sales of advanced semiconductors to China in 2022 to curb its military modernization.
Similar curbs apply to Russia. Proposals in Washington would mandate that U.S. chipmakers incorporate location verification technology into their products to prevent diversion to restricted countries.
China has condemned the export controls as an effort to suppress its technological rise, with regulators recently summoning Nvidia to raise concerns over alleged “backdoors” in its chips, claims the company has denied.
The use of trackers by U.S. enforcement agencies dates back decades, but their application to AI chip shipments reflects rising tensions in the tech supply chain.
A recent Justice Department case revealed that Chinese nationals accused of smuggling tens of millions of dollars’ worth of AI chips had been warned to “look carefully” for tracking devices before onward shipment.
Written By Rodney Mbua
