US Tracks AI Chip Shipments to Prevent China Diversions

• US authorities embed location trackers in select AI chip shipments to detect illegal rerouting to China, intensifying export control enforcement.

Covert Measures Target High-Risk Shipments

US law enforcement agencies have begun embedding location tracking devices in shipments of advanced AI chips and servers deemed at risk of illegal diversion to China. These covert tools are used selectively, focusing on shipments under active investigation rather than across the board. Trackers have reportedly been found in packages from manufacturers such as Dell and Super Micro, containing chips from Nvidia and AMD. Devices range in size from smartphone-like units to smaller components hidden within server hardware.

The tactic reflects Washington’s increasing efforts to enforce export restrictions introduced in 2022, aimed at curbing China’s access to high-performance semiconductors. These chips are considered critical for military modernization and advanced AI development. By monitoring the physical movement of shipments, authorities aim to build cases against individuals and companies violating export laws. The Bureau of Industry and Security, Homeland Security Investigations, and the FBI are said to be involved in these operations.

Legal Framework and Industry Awareness

Tracking devices have long been used in export enforcement, with documented cases dating back to the 1980s. In some instances, installation requires a judicial warrant, while others proceed with administrative approval. Companies not under investigation may be informed and asked to consent, though devices are sometimes installed without their knowledge. Industry insiders report that resellers in China routinely inspect diverted shipments for trackers due to the legal risks involved.

A recent Justice Department affidavit described suspects warning each other to “look carefully” for trackers on Quanta servers containing Nvidia chips. This suggests growing awareness among smuggling networks of the surveillance tactic. Despite the covert nature of the operation, images and videos of tracker removal have circulated among resellers. The legal admissibility of tracker data depends on how the devices were authorized and deployed.

Export Controls and Geopolitical Tensions

The US has tightened export controls on AI chips to China and Russia, citing national security concerns. These restrictions have led to the development of downgraded chip models like Nvidia’s H20 and AMD’s MI308, which comply with licensing conditions. In parallel, Congress has proposed legislation requiring chipmakers to include location verification technology in their products. China has criticized these measures, accusing the US of economic coercion and raising concerns about potential “backdoors” in American chips.

Last month, China’s cyberspace regulator summoned Nvidia to discuss alleged security risks, which the company strongly denied. The broader context includes ongoing trade negotiations, with China reportedly seeking relaxation of chip export controls. Meanwhile, the US has traced AI chip smuggling routes through countries such as Malaysia, Singapore, and the UAE. The use of trackers adds a new layer to enforcement, enabling authorities to monitor shipments in real time and respond to diversion attempts.