U.S. Uses Secret Trackers to Trace AI Chips Diverted to China, Sources Say

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Two sources told Reuters that U.S. authorities have secretly placed location trackers in some advanced chip shipments they see as at high risk of illegal diversion to China. They said the trackers are intended to locate AI chips that are sent to locations restricted by U.S. export laws, but authorities only examine some shipments.

Previously, people used these types of trackers for items like airplane parts, but they have recently used them against semiconductor smuggling. The trackers can help build cases against people and companies who profit from violating U.S. export controls, the sources said. They declined to be named because of the sensitivity of the issue.

Five sources in the AI server supply chain said they know about trackers in Dell and Super Micro shipments with Nvidia and AMD chips. They said trackers are commonly hidden in the packaging and, in one 2024 case, were inside servers, with some about the size of a smartphone. The U.S. started restricting the sale of advanced chips by Nvidia, AMD, and other manufacturers to China in 2022.

China’s foreign ministry said it was not aware of the matter. Dell stated it was also unaware of a U.S. government initiative to place trackers in its product shipments; Nvidia stated, “We don't install secret tracking devices in our products,” and Super Micro maintained it does not disclose security practices and policies.

The White House and both houses of Congress have proposed requiring U.S. chip makers to include location verification technology. People involved in diversion said they inspect shipments for the trackers.

A recent Justice Department affidavit quoted one alleged smuggler warning: “Pay attention to see if there is a tracker on it; you must look for it carefully… Who knows what they will do?”