US embeds covert location-tracking devices inside high-risk AI chip and server shipments
Measure targets diverted Nvidia/AMD-powered servers to detect China-bound smuggling routes and seizures
Part of intensified 2022 export-control enforcement, involving BIS, HSI and FBI investigations
Trackers found in Dell and Super Micro shipments; industry warned to inspect carefully
US Embeds Location Trackers in AI Chip Shipments to Curb Illegal Diversions to China
US agencies are secretly placing location trackers in shipments of advanced AI chips and servers to catch illegal exports to China, amid tightened semiconductor controls
US Embeds Location Trackers in AI Chip Shipments to Curb Illegal Diversions to China
Summary
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US authorities have secretly embedded location-tracking devices in select shipments of advanced AI chips and servers in a bid to detect illegal diversions to China, Reuters reported.
The previously unreported tactic targets high-risk shipments under investigation and reflects Washington’s increasingly aggressive enforcement of chip export controls. The trackers, sometimes concealed inside packaging or even within servers, allow law enforcement to trace goods restricted under US export laws and build cases against violators.
Semiconductor Restrictions
The measure follows sweeping restrictions introduced in 2022 on the sale of high-end semiconductors from companies such as Nvidia and AMD to China, aimed at curbing Beijing’s military modernisation. Chips bound for Russia are also subject to similar curbs.
As per the report, people in the AI server supply chain said the trackers have been spotted in shipments from Dell and Super Micro containing Nvidia and AMD processors. Some devices are as large as a smartphone, while others are discreet enough to be hidden inside server hardware.
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The Bureau of Industry and Security, Homeland Security Investigations, and the FBI are reportedly involved. Dell said it was “not aware” of any such government initiative and Nvidia declined to comment.
China’s Response to Restrictions
China has condemned US chip curbs as an effort to suppress its rise, and last month warned Nvidia over alleged “backdoor” risks, a claim the company denies. Meanwhile, smugglers have tried to bypass restrictions by routing chips through countries like Malaysia, Singapore, and the UAE.
Use of location trackers by US export enforcers dates back decades, with past applications ranging from aircraft parts to electronics. In some cases, installation requires judicial warrants; in others, administrative approval is sufficient. Industry sources in China said they routinely inspect diverted shipments for such devices, given the legal and financial risks.
An affidavit in a recent Justice Department case against two Chinese nationals accused of smuggling millions of dollars’ worth of AI chips revealed that co-conspirators explicitly warned each other to “look carefully” for trackers on restricted servers.
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The tactic underscores both the US’s determination to control the flow of advanced semiconductors to China and the lengths to which smugglers will go to evade detection.
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