Is the US secretly tracking AI chip shipments to prevent China diversions?

Unconfirmed reports suggest US authorities may be embedding location trackers in high-risk semiconductor shipments to combat export violations.

US law enforcement agencies may be secretly placing tracking devices in shipments of advanced AI chips suspected of being diverted to China, according to sources cited in a Reuters report. The unverified claims, if true, would represent an escalation in enforcement tactics as Washington seeks to prevent cutting-edge semiconductors from reaching restricted destinations.

According to a report by Reuters, two people with claimed direct knowledge of the practice said US authorities have been embedding location trackers in targeted chip shipments deemed at high risk of illegal diversion. The sources, who reportedly declined to be named due to the sensitive nature of the allegations, suggested the measures apply only to select shipments already under investigation.

Five additional individuals allegedly involved in the AI server supply chain told Reuters they were aware of tracker use in shipments from major manufacturers including Dell and Super Micro Computer, which incorporate processors from Nvidia and AMD.

The sources claimed trackers have been found both on shipping boxes and hidden within server packaging, with some devices reportedly as large as smartphones. In one purported 2024 case, a Dell server shipment containing Nvidia chips allegedly included multiple tracking devices at various locations.

Official responses

Major technology companies have responded to the allegations with varying degrees of denial. Dell stated it was "not aware of a US Government initiative to place trackers in its product shipments," while Nvidia said it doesn't "install secret tracking devices" in its products.

Super Micro declined to comment on any tracking actions by US authorities, citing its policy of not disclosing security practices. AMD did not respond to requests for comment, according to Reuters.

US government agencies including the Department of Homeland Security Investigations and the FBI declined to comment on the allegations. The Department of Commerce's Bureau of Industry and Security, which oversees export controls, also did not respond to the Reuters inquiry.

Context of chip export controls

The alleged tracking program, if it exists, would operate within the broader context of US semiconductor export restrictions implemented since 2022. These controls target advanced chips from companies like Nvidia and AMD, aiming to limit China's access to technology that could enhance its military capabilities.

The restrictions have created a complex enforcement challenge, with the US reportedly tracing organized AI chip smuggling networks operating through countries including Malaysia, Singapore, and the UAE.

The use of tracking devices by US law enforcement in export control cases isn't entirely new. Reuters noted a 1985 court decision involving Hughes Aircraft, where US Customs Service agents installed a tracking device in equipment subject to export controls.

Sources suggested that authorities sometimes obtain judicial warrants for tracker installation, making any gathered evidence easier to use in criminal proceedings. Companies may be informed about trackers if they're not investigation targets and might consent to their installation.

If confirmed, the alleged tracking program would underscore the lengths to which US authorities might go to enforce semiconductor export restrictions. The claims come as the industry navigates complex compliance requirements while serving global markets.

Recent legal cases have highlighted the ongoing challenges in export control enforcement. Earlier this month, US authorities arrested two Chinese nationals on charges of illegally shipping tens of millions of dollars worth of AI chips to China.

Questions remain

The Reuters report raises significant questions about the scope and methods of US export control enforcement, though key details remain unverified. The lack of official confirmation from government agencies and the reliance on unnamed sources mean the full extent of any tracking program remains unclear.

The allegations, if substantiated, would create a notable irony in US-China tech relations. Washington has repeatedly raised concerns about Chinese surveillance capabilities and tracking technologies, often citing them as national security threats. The possibility that US authorities might be embedding their own tracking devices in commercial shipments adds an unexpected dimension to ongoing debates about surveillance and technological sovereignty.

As the semiconductor industry continues to navigate geopolitical tensions and export restrictions, the alleged use of tracking technology represents another potential layer of complexity in global chip supply chain.