U.S. Secretly Embeds Trackers in AI Chip Shipments to Enforce Export Controls

Exclusive: US embeds trackers in AI chip shipments to catch diversions to China, sources say

SINGAPORE/NEW YORK, Aug 13 (Reuters) - U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic. The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said. They show the lengths to which the U.S. has gone to enforce its chip export restrictions on China, even as the Trump administration has sought to relax some curbs on Chinese access to advanced American semiconductors. The trackers can help build cases against people and companies who profit from violating U.S. export controls, said the people who declined to be named because of the sensitivity of the issue. Location trackers are a decades-old investigative tool used by U.S. law enforcement agencies to track products subject to export restrictions, such as airplane parts. They have been used to combat the illegal diversion of semiconductors in recent years, one source said. Five other people actively involved in the AI server supply chain say they are aware of the use of the trackers in shipments of servers from manufacturers such as Dell (DELL.N), opens new tab and Super Micro (SMCI.O), opens new tab, which include chips from Nvidia (NVDA.O), opens new tab and AMD (AMD.O), opens new tab. Those people said the trackers are typically hidden in the packaging of the server shipments. They did not know which parties were involved in installing them and where along the shipping route they were put in. Reuters was not able to determine how often the trackers have been used in chip related investigations or when U.S. authorities started using them to investigate chip smuggling. The U.S. started restricting the sale of advanced chips by Nvidia, AMD and other manufacturers to China in 2022. In one 2024 case described by two of the people involved in the server supply chain, a shipment of Dell servers with Nvidia chips included both large trackers on the shipping boxes and smaller, more discreet devices hidden inside the packaging -- and even within the servers themselves. A third person said they had seen images and videos of trackers being removed by other chip resellers from Dell and Super Micro servers. The person said some of the larger trackers were roughly the size of a smartphone. The U.S. Department of Commerce's Bureau of Industry and Security, which oversees export controls and enforcement, is typically involved, and Homeland Security Investigations and the Federal Bureau of Investigation, may take part too, said the sources. The HSI and FBI both declined to comment. The Commerce Department did not respond to requests for comment. The Chinese foreign ministry did not have immediate comment. Super Micro said in a statement that it does not disclose its "security practices and policies in place to protect our worldwide operations, partners, and customers." It declined to comment on any tracking actions by U.S. authorities. Dell said it is "not aware of a U.S. Government initiative to place trackers in its product shipments." Nvidia declined to comment, while AMD did not answer a request for comment. CHIP RESTRICTIONS The United States, which dominates the global AI chip supply chain, has sought to limit exports of chips and other technology to China in recent years to restrain its military modernization. It has also put restrictions on the sale of chips to Russia to undercut war efforts against Ukraine. The White House and both houses of Congress have proposed requiring U.S. chip firms to include location verification technology with their chips to prevent them from being diverted to countries where U.S. export regulations restrict sales. China has slammed the U.S. exports curbs as part of a campaign to suppress its rise and criticized the location tracking proposal. Last month, the country's powerful cyberspace regulator summoned Nvidia to a meeting to express its concerns over the risks of its chips containing "backdoors" that would allow remote access or control, which the company has strongly denied. In January, Reuters reported the U.S. had traced organized AI chip smuggling to China via countries such as Malaysia, Singapore, and the UAE -- but it is unclear if tracking devices were involved. The use of trackers by U.S. law enforcement goes back decades. In 1985, Hughes Aircraft shipped equipment subject to U.S. export controls, according to a court decision reviewed by Reuters. Executing a search warrant, the U.S. Customs Service intercepted the crate at a Houston airport and installed a tracking device, the decision noted. U.S. export enforcement agents sometimes install trackers after getting administrative approval. Other times they get a judge to issue a warrant authorizing use of the device, one source said. With a warrant, it is easier to use the information as evidence in a criminal case. A company may be told about the tracker, if they are not a subject of the investigation, and may consent to the government's installation of the trackers, the source added. But the devices can also be installed without their knowledge. People involved in diverting export-controlled chip and server shipments to China said they were aware of the devices. Two of the supply chain sources, who are China-based resellers of export-controlled chips, said they regularly took care to inspect diverted shipments of AI chip servers for the trackers due to the risks of the devices being embedded. An affidavit filed with a U.S Department of Justice complaint regarding the arrests of two Chinese nationals charged with illegally shipping tens of millions of dollars' worth of AI chips to China earlier this month describes one co-conspirator instructing another to check for trackers on Quanta H200 servers, which contain Nvidia chips. It said the English language text was sent by a co-conspirator, whose name was redacted, to one of the defendants, Yang Shiwei. "Pay attention to see if there is a tracker on it, you must look for it carefully," said the person, who went on to call the Trump administration by an obscenity. "Who knows what they will do." Reporting by Fanny Potkin and Jun Yuan Yong in Singapore, Karen Freifeld in New York; Additional reporting by China newsroom; Editing by Lincoln Feast. Our Standards: The Thomson Reuters Trust Principles., opens new tab

U.S. Allegedly Super-Charged Its Efforts to Prevent China From Getting American Chips

The AI chip arms race reportedly involves spooky surveillance tactics. The Trump administration has made curbing China's access to high-powered AI chips a high priority. According to the government, China may use the chips to build up its arsenal of military technology, and it simply can't have that. At the same time, America's considerable and longstanding chip export controls may also be aimed at slowing China's own chip industry. Now, a report from Reuters claims that the government has been embedding location tracking devices in AI chip shipments, in an effort to police potential diversions of the tech to America's geopolitical foe. Reuters reports that sources with knowledge of the policy claim that the U.S. Department of Commerce's Bureau of Industry and Security, America's export enforcement agency, is "typically involved" with such operations. Those same sources claim that the FBI and Homeland Security Investigations "may take part too." Gizmodo reached out to the agencies and the Trump administration for comment. The tracking devices are reportedly being placed in "targeted shipments" of AI chips. Those shipments are being chosen because authorities view them as being at "high risk of illegal diversion to China." The point of the trackers is to punish companies or individuals who may violate U.S. export controls. Sources also said that the trackers have been used in server shipments from prominent manufacturers, including Dell and Super Micro, which include chips made by AMD and Nvidia. An Nvidia spokesperson told Gizmodo, "We don't install secret tracking devices in our products," full stop. They also referred us to a recently published company blog that states: "There are no back doors in NVIDIA chips. No kill switches. No spyware. That’s not how trustworthy systems are built â€" and never will be." The "chip war" has, to some degree, always been a thing, and governments, particularly the U.S., have always fought for a competitive advantage when it comes to the semiconductor industry. The advent of the AI chip has only upped the ante, as nations fight for dominance over the emerging field of generative AI, and all the potential applications (military included) it may have. At the same time, the Trump administration has sent mixed messages on this issue, as Trump recently claimed he would be open to allowing Nvidia to sell a "scaled-down" version of its GPU chip to China. The American practice of embedding hidden, Trojan-horse-style surveillance applications inside commercial hardware and software exports is also not new. When the Edward Snowden revelations originally broke in 2014, one of the bombshells at the time was the apparent revelation that the NSA routinely embeds "backdoor surveillance tools†inside routers and other computer hardware before they are sent on to foreign nations.

AI chip shipments from US had secret location trackers: Report

The US law enforcement agencies have previously tracked various types of shipments with the help of such location trackers. (Representational image) Some chip shipments delivered from the United States to other locations had tracking devices, according to a report. People familiar with the matter told a UK-based news agency that the location tracking devices were placed in shipments at high risk of illegal diversion to China. The step reportedly aimed to restrict AI chip exports to destinations under the US administration's curbs. Those people said the trackers are typically hidden in the packaging of the server shipments. Reuters reported that they did not know which parties were involved in installing them and where along the shipping route they were put in. Location trackers that can help build cases against people and companies that violate export curbs are a decades-old tactic to catch diversions to restricted countries. US law enforcement agencies have previously tracked various types of shipments with the help of such location trackers. The AI chips are critical for developing cutting-edge tech innovations from EVs, semiconductors, to spacecraft-linked items.

Report: U.S. government placing trackers in AI server shipments to enforce chip export controls - SiliconANGLE

Report: U.S. government placing trackers in AI server shipments to enforce chip export controls The U.S. is reportedly trying to crack down on artificial intelligence chips being shipped to China by placing tracking devices inside the computer servers it believes are at high risk of being diverted from their intended destinations. In an exclusive report, Reuters said U.S. authorities have placed numerous trackers in shipments of servers, as part of an effort to trace how many are getting past its controls on the export of high-powered processors to countries sanctioned from buying them. According to the report, the trackers are still being used by the current White House administration under President Donald Trump, in order to build a case against individuals and companies suspected of trying to profit by evading U.S. trade sanctions. Multiple anonymous sources told Reuters that the devices are often placed in the packaging of shipments from large U.S. server makers, including Dell Technologies Inc. and Super Micro Computer Inc., as well as individual chips sold by Nvidia Corp. and Advanced Micro Devices Inc. A number of U.S. government agencies are thought to be involved in the effort, including the Bureau of Industry and Security, the Federal Bureau of Investigation and U.S. Homeland Security Investigations. Reuters said it has been unable to determine exactly when or how the trackers are placed inside server shipments. However, in one case, the devices were discovered inside the packaging of a shipment of Dell servers powered by Nvidia graphics processing units. In another case, it's said that trackers were even found within the servers. The report adds that the use of Trojan horse-style tracking devices is not new, with U.S. authorities resorting to similar tricks in order to prevent illegal exports of aircraft parts. When Edward Snowdon released hundreds of documents on the National Security Agency's PRISM surveillance program in 2014, one of the bombshells was that the government often inserts "backdoor surveillance tools" inside routers and other computer hardware before it's shipped to foreign countries. The U.S. first introduced prohibitions on the sale of AI chips to China in 2022, citing national security fears and the need to curb the technological development of the Chinese military. Russia has been slapped with similar sanctions due to its invasion of Ukraine. In addition, the U.S. is also motivated to try and slow down China's efforts to develop its own chipmaking industry. The trackers are not always successful. According to Reuters, chip smugglers have begun routinely checking shipments of servers from Dell and Super Micro and have sometimes removed them from the packaging. The report adds that some of the largest devices were approximately the same size as a smartphone. When approached for comment, Dell said in a statement that it is "not aware of a U.S. government initiative to place trackers in its product shipments". Super Micro told Reuters bluntly it does not discuss its "security practices and policies in place to protect our worldwide operations, partners and customers." Nvidia went further, stressing that "we don't install secret tracking devices in our products", while AMD refused to comment on the report. Despite the restrictions, the Trump administration recently made a deal with China that allows it to obtain some AI chip products that have been deliberately throttled. As part of that arrangement, Nvidia and AMD have agreed to pay the government 15% of their revenues from Chinese chip sales.

US authorities secretly place location tracking devices in targeted AI chip shipments to China

TL;DR: US authorities are covertly placing location trackers in shipments of advanced AI chips and servers to prevent illegal diversion to China, enforcing export restrictions amid ongoing investigations. This tactic targets high-risk shipments from manufacturers like Dell and Super Micro, highlighting intensified US efforts to control semiconductor exports. US authorities have been secretly placing location tracking devices inside of shipments of advanced AI chips and AI servers that are at high risk of illegal diversion into China. In a new report from Reuters, it's being reported that the new measures have been enacted to detect AI chips being diverted through countries that are under US export restrictions, and apply only to particular shipments that are under investigation. This move shows how far the US is willing to go to enforce its chip export restrictions to China, and that's even with the Trump administration relaxing some of the US export restrictions to give China access to some advanced US-designed semiconductors. The trackers are a decades-old investigative tool used by US law enforcement agencies, so that they can track products that are under export restrictions, including airplane parts. Trackers have been used to combat the illegal diversion of semiconductors in the past years, according to one of Reuters' sources. It's not just AI chips that have tracking devices installed, but also the AI server supply chain that is aware of trackers being used in shipments of servers from manufacturers including Dell and Super Micro, with their AI servers containing AI chips from NVIDIA and AMD. Reuters' sources said that the trackers are normally hidden inside of the packaging of the server shipments, noting that they weren't aware which parties were involved in the physical installation (or hiding) of the trackers, and where along the shipping routes they were being installed. One of Reuters' sources said that they had eyes-on with images and videos of trackers being removed by other chip resellers from Dell and Super Micro AI servers, with one of the people saying some of the bigger trackers were about the size of a regular smartphone. The US Department of Commerce's Bureau of Industry and Security, which oversees export controls and enforcement, is normally involved with these matters, with Homeland Security Investigations and the Federal Bureau of Investigation possibly taking part in this as well, said Reuters' sources. Super Micro said in a statement that it does not disclose its "security practices and policies in place to protect our worldwide operations, partners, and customers" and declined on further comments on any tracking actions that US authorities might be doing. Dell said that it is "not aware of a US government initiative to place trackers in its product shipments", while NVIDIA declined to comment, and AMD didn't answer Reuters' request for comment.

Exclusive-US Embeds Trackers in AI Chip Shipments to Catch Diversions to China, Sources Say

By Fanny Potkin, Karen Freifeld and Jun Yuan Yong SINGAPORE/NEW YORK (Reuters) -U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic. The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said. They show the lengths to which the U.S. has gone to enforce its chip export restrictions on China, even as the Trump administration has sought to relax some curbs on Chinese access to advanced American semiconductors. The trackers can help build cases against people and companies who profit from violating U.S. export controls, said the people who declined to be named because of the sensitivity of the issue. Location trackers are a decades-old investigative tool used by U.S. law enforcement agencies to track products subject to export restrictions, such as airplane parts. They have been used to combat the illegal diversion of semiconductors in recent years, one source said. Five other people actively involved in the AI server supply chain say they are aware of the use of the trackers in shipments of servers from manufacturers such as Dell and Super Micro, which include chips from Nvidia and AMD. Those people said the trackers are typically hidden in the packaging of the server shipments. They did not know which parties were involved in installing them and where along the shipping route they were put in. Reuters was not able to determine how often the trackers have been used in chip related investigations or when U.S. authorities started using them to investigate chip smuggling. The U.S. started restricting the sale of advanced chips by Nvidia, AMD and other manufacturers to China in 2022. In one 2024 case described by two of the people involved in the server supply chain, a shipment of Dell servers with Nvidia chips included both large trackers on the shipping boxes and smaller, more discreet devices hidden inside the packaging -- and even within the servers themselves. A third person said they had seen images and videos of trackers being removed by other chip resellers from Dell and Super Micro servers. The person said some of the larger trackers were roughly the size of a smartphone. The U.S. Department of Commerce's Bureau of Industry and Security, which oversees export controls and enforcement, is typically involved, and Homeland Security Investigations and the Federal Bureau of Investigation, may take part too, said the sources. The HSI and FBI both declined to comment. The Commerce Department did not respond to requests for comment. The Chinese foreign ministry did not have immediate comment. Super Micro said in a statement that it does not disclose its "security practices and policies in place to protect our worldwide operations, partners, and customers." It declined to comment on any tracking actions by U.S. authorities. Dell said it is "not aware of a U.S. Government initiative to place trackers in its product shipments." Nvidia declined to comment, while AMD did not answer a request for comment. CHIP RESTRICTIONS The United States, which dominates the global AI chip supply chain, has sought to limit exports of chips and other technology to China in recent years to restrain its military modernization. It has also put restrictions on the sale of chips to Russia to undercut war efforts against Ukraine. The White House and both houses of Congress have proposed requiring U.S. chip firms to include location verification technology with their chips to prevent them from being diverted to countries where U.S. export regulations restrict sales. China has slammed the U.S. exports curbs as part of a campaign to suppress its rise and criticized the location tracking proposal. Last month, the country's powerful cyberspace regulator summoned Nvidia to a meeting to express its concerns over the risks of its chips containing "backdoors" that would allow remote access or control, which the company has strongly denied. In January, Reuters reported the U.S. had traced organized AI chip smuggling to China via countries such as Malaysia, Singapore, and the UAE -- but it is unclear if tracking devices were involved. The use of trackers by U.S. law enforcement goes back decades. In 1985, Hughes Aircraft shipped equipment subject to U.S. export controls, according to a court decision reviewed by Reuters. Executing a search warrant, the U.S. Customs Service intercepted the crate at a Houston airport and installed a tracking device, the decision noted. U.S. export enforcement agents sometimes install trackers after getting administrative approval. Other times they get a judge to issue a warrant authorizing use of the device, one source said. With a warrant, it is easier to use the information as evidence in a criminal case. A company may be told about the tracker, if they are not a subject of the investigation, and may consent to the government's installation of the trackers, the source added. But the devices can also be installed without their knowledge. People involved in diverting export-controlled chip and server shipments to China said they were aware of the devices. Two of the supply chain sources, who are China-based resellers of export-controlled chips, said they regularly took care to inspect diverted shipments of AI chip servers for the trackers due to the risks of the devices being embedded. An affidavit filed with a U.S Department of Justice complaint regarding the arrests of two Chinese nationals charged with illegally shipping tens of millions of dollars' worth of AI chips to China earlier this month describes one co-conspirator instructing another to check for trackers on Quanta H200 servers, which contain Nvidia chips. It said the English language text was sent by a co-conspirator, whose name was redacted, to one of the defendants, Yang Shiwei. "Pay attention to see if there is a tracker on it, you must look for it carefully," said the person, who went on to call the Trump administration by an obscenity. "Who knows what they will do." (Reporting by Fanny Potkin and Jun Yuan Yong in Singapore, Karen Freifeld in New York; Additional reporting by China newsroom; Editing by Lincoln Feast.)

US embeds trackers in AI chip shipments to catch diversions to China, sources say

U.S. authorities are secretly embedding location tracking devices in shipments of advanced AI chips bound for China to combat illegal diversion, a tactic revealed by sources familiar with the operations. These measures, targeting specific shipments under investigation, aim to enforce export restrictions and build cases against violators. U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic. The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said. They show the lengths to which the U.S. has gone to enforce its chip export restrictions on China, even as the Trump administration has sought to relax some curbs on Chinese access to advanced American semiconductors. The trackers can help build cases against people and companies who profit from violating U.S. export controls, said the people who declined to be named because of the sensitivity of the issue. Location trackers are a decades-old investigative tool used by U.S. law enforcement agencies to track products subject to export restrictions, such as airplane parts. They have been used to combat the illegal diversion of semiconductors in recent years, one source said. Five other people actively involved in the AI server supply chain say they are aware of the use of the trackers in shipments of servers from manufacturers such as Dell and Super Micro, which include chips from Nvidia and AMD. Those people said the trackers are typically hidden in the packaging of the server shipments. They did not know which parties were involved in installing them and where along the shipping route they were put in. Reuters was not able to determine how often the trackers have been used in chip related investigations or when U.S. authorities started using them to investigate chip smuggling. The U.S. started restricting the sale of advanced chips by Nvidia, AMD and other manufacturers to China in 2022. In one 2024 case described by two of the people involved in the server supply chain, a shipment of Dell servers with Nvidia chips included both large trackers on the shipping boxes and smaller, more discreet devices hidden inside the packaging - and even within the servers themselves. A third person said they had seen images and videos of trackers being removed by other chip resellers from Dell and Super Micro servers. The person said some of the larger trackers were roughly the size of a smartphone. The U.S. Department of Commerce's Bureau of Industry and Security, which oversees export controls and enforcement, is typically involved, and Homeland Security Investigations and the Federal Bureau of Investigation, may take part too, said the sources. The HSI and FBI both declined to comment. The Commerce Department did not respond to requests for comment. The Chinese foreign ministry did not have immediate comment. Super Micro said in a statement that it does not disclose its "security practices and policies in place to protect our worldwide operations, partners, and customers." It declined to comment on any tracking actions by U.S. authorities. Dell said it is "not aware of a U.S. Government initiative to place trackers in its product shipments." Nvidia declined to comment, while AMD did not answer a request for comment. CHIP RESTRICTIONS The United States, which dominates the global AI chip supply chain, has sought to limit exports of chips and other technology to China in recent years to restrain its military modernization. It has also put restrictions on the sale of chips to Russia to undercut war efforts against Ukraine. The White House and both houses of Congress have proposed requiring U.S. chip firms to include location verification technology with their chips to prevent them from being diverted to countries where U.S. export regulations restrict sales. China has slammed the U.S. exports curbs as part of a campaign to suppress its rise and criticized the location tracking proposal. Last month, the country's powerful cyberspace regulator summoned Nvidia to a meeting to express its concerns over the risks of its chips containing "backdoors" that would allow remote access or control, which the company has strongly denied. In January, Reuters reported the U.S. had traced organized AI chip smuggling to China via countries such as Malaysia, Singapore, and the UAE - but it is unclear if tracking devices were involved. The use of trackers by U.S. law enforcement goes back decades. In 1985, Hughes Aircraft shipped equipment subject to U.S. export controls, according to a court decision reviewed by Reuters. Executing a search warrant, the U.S. Customs Service intercepted the crate at a Houston airport and installed a tracking device, the decision noted. U.S. export enforcement agents sometimes install trackers after getting administrative approval. Other times they get a judge to issue a warrant authorizing use of the device, one source said. With a warrant, it is easier to use the information as evidence in a criminal case. A company may be told about the tracker, if they are not a subject of the investigation, and may consent to the government's installation of the trackers, the source added. But the devices can also be installed without their knowledge. People involved in diverting export-controlled chip and server shipments to China said they were aware of the devices. Two of the supply chain sources, who are China-based resellers of export-controlled chips, said they regularly took care to inspect diverted shipments of AI chip servers for the trackers due to the risks of the devices being embedded. An affidavit filed with a U.S Department of Justice complaint regarding the arrests of two Chinese nationals charged with illegally shipping tens of millions of dollars' worth of AI chips to China earlier this month describes one co-conspirator instructing another to check for trackers on Quanta H200 servers, which contain Nvidia chips. It said the English language text was sent by a co-conspirator, whose name was redacted, to one of the defendants, Yang Shiwei. "Pay attention to see if there is a tracker on it, you must look for it carefully," said the person, who went on to call the Trump administration by an obscenity. "Who knows what they will do."

US embeds trackers in AI chip shipments to catch diversions to China, sources say - The Economic Times

U.S. authorities are secretly embedding location tracking devices in shipments of advanced AI chips bound for China to combat illegal diversion, a tactic revealed by sources familiar with the operations. These measures, targeting specific shipments under investigation, aim to enforce export restrictions and build cases against violators.U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic. The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said. They show the lengths to which the U.S. has gone to enforce its chip export restrictions on China, even as the Trump administration has sought to relax some curbs on Chinese access to advanced American semiconductors. The trackers can help build cases against people and companies who profit from violating U.S. export controls, said the people who declined to be named because of the sensitivity of the issue. Location trackers are a decades-old investigative tool used by U.S. law enforcement agencies to track products subject to export restrictions, such as airplane parts. They have been used to combat the illegal diversion of semiconductors in recent years, one source said. Five other people actively involved in the AI server supply chain say they are aware of the use of the trackers in shipments of servers from manufacturers such as Dell and Super Micro, which include chips from Nvidia and AMD. Those people said the trackers are typically hidden in the packaging of the server shipments. They did not know which parties were involved in installing them and where along the shipping route they were put in. Reuters was not able to determine how often the trackers have been used in chip related investigations or when U.S. authorities started using them to investigate chip smuggling. The U.S. started restricting the sale of advanced chips by Nvidia, AMD and other manufacturers to China in 2022. In one 2024 case described by two of the people involved in the server supply chain, a shipment of Dell servers with Nvidia chips included both large trackers on the shipping boxes and smaller, more discreet devices hidden inside the packaging - and even within the servers themselves. A third person said they had seen images and videos of trackers being removed by other chip resellers from Dell and Super Micro servers. The person said some of the larger trackers were roughly the size of a smartphone. The U.S. Department of Commerce's Bureau of Industry and Security, which oversees export controls and enforcement, is typically involved, and Homeland Security Investigations and the Federal Bureau of Investigation, may take part too, said the sources. The HSI and FBI both declined to comment. The Commerce Department did not respond to requests for comment. The Chinese foreign ministry did not have immediate comment. Super Micro said in a statement that it does not disclose its "security practices and policies in place to protect our worldwide operations, partners, and customers." It declined to comment on any tracking actions by U.S. authorities. Dell said it is "not aware of a U.S. Government initiative to place trackers in its product shipments." Nvidia declined to comment, while AMD did not answer a request for comment. CHIP RESTRICTIONS The United States, which dominates the global AI chip supply chain, has sought to limit exports of chips and other technology to China in recent years to restrain its military modernization. It has also put restrictions on the sale of chips to Russia to undercut war efforts against Ukraine. The White House and both houses of Congress have proposed requiring U.S. chip firms to include location verification technology with their chips to prevent them from being diverted to countries where U.S. export regulations restrict sales. China has slammed the U.S. exports curbs as part of a campaign to suppress its rise and criticized the location tracking proposal. Last month, the country's powerful cyberspace regulator summoned Nvidia to a meeting to express its concerns over the risks of its chips containing "backdoors" that would allow remote access or control, which the company has strongly denied. In January, Reuters reported the U.S. had traced organized AI chip smuggling to China via countries such as Malaysia, Singapore, and the UAE - but it is unclear if tracking devices were involved. The use of trackers by U.S. law enforcement goes back decades. In 1985, Hughes Aircraft shipped equipment subject to U.S. export controls, according to a court decision reviewed by Reuters. Executing a search warrant, the U.S. Customs Service intercepted the crate at a Houston airport and installed a tracking device, the decision noted. U.S. export enforcement agents sometimes install trackers after getting administrative approval. Other times they get a judge to issue a warrant authorizing use of the device, one source said. With a warrant, it is easier to use the information as evidence in a criminal case. A company may be told about the tracker, if they are not a subject of the investigation, and may consent to the government's installation of the trackers, the source added. But the devices can also be installed without their knowledge. People involved in diverting export-controlled chip and server shipments to China said they were aware of the devices. Two of the supply chain sources, who are China-based resellers of export-controlled chips, said they regularly took care to inspect diverted shipments of AI chip servers for the trackers due to the risks of the devices being embedded. An affidavit filed with a U.S Department of Justice complaint regarding the arrests of two Chinese nationals charged with illegally shipping tens of millions of dollars' worth of AI chips to China earlier this month describes one co-conspirator instructing another to check for trackers on Quanta H200 servers, which contain Nvidia chips. It said the English language text was sent by a co-conspirator, whose name was redacted, to one of the defendants, Yang Shiwei. "Pay attention to see if there is a tracker on it, you must look for it carefully," said the person, who went on to call the Trump administration by an obscenity. "Who knows what they will do."

Spy twist? US allegedly bugged AI chips of Nvidia and AMD bound for China with hidden trackers

US government AI chip tracking to China: The United States government is trying to stop advanced Artificial Intelligence chips from reaching China. Federal authorities are secretly placing trackers in shipments suspected of illegal diversion. These trackers are hidden in containers and server packaging. Smugglers are aware of the tracking efforts. Nvidia's CEO denies advanced chips are reaching China. US government AI chip tracking to China: The US government is reportedly taking secretive steps to stop high-end AI chips from ending up in China, as per a report. According to anonymous sources cited by Reuters, federal authorities have been placing hidden location trackers inside certain shipments of AI servers and chips. This measure is part of an investigation targeting shipments suspected of being illegally diverted to China, as per the Tom's Hardware report. These trackers aren't placed on every shipment, but only on those considered "high risk," according to the report. Because putting trackers on all shipments would be too costly, authorities focus on targeted shipments believed to be vulnerable, as per the Tom's Hardware report. The devices have been found in shipping containers, inside server packaging, and even built into the racks holding the servers, according to the Tom's Hardware report. Some of these trackers are reportedly as large as smartphones, and have been discovered in equipment from companies like Dell and Super Micro, as per the report. Those involved in smuggling are also aware of the tracking, according to Tom's Hardware. Court documents from a recent smuggling case reveal that suspects have warned each other to watch out for trackers on shipments, as per the report. ALSO READ: French woman sues employer after being paid to do nothing for 20 years, and still got salary Meanwhile, Nvidia's CEO Jensen Huang has repeatedly denied that the company's most advanced AI chips are making their way to China, even as reports suggest a billion-dollar black market exists for these chips in East Asia, as reported by Tom's Hardware. The US government is keen to slow China's progress in AI because it is considered a 'dual-use technology' that is applicable in both civilian and military purposes, according to the report. Export controls have been placed on the most powerful chips from Nvidia and AMD, with bans on even specific models, especially designed to comply with the initial set of export controls like the Nvidia H20 and AMD MI308, in April 2025, as per the report. While some restrictions have since eased, the most powerful new chips remain off-limits for export to China, according to Tom's Hardware. AMD and Nvidia have even agreed on a deal to share 15% of the sales revenue with the government in exchange for export licenses for their H20 and MI308, as per the report. ALSO READ: Blow to Trump's hopes as he won't like this: Fed's Daly says rate cut unlikely next Why is the US putting trackers on AI chip shipments? To prevent high-end AI chips from being illegally diverted to China as part of an ongoing investigation. Are all shipments being tracked? No, only high-risk shipments are allegedly targeted due to cost and strategic focus.

Dell, Super Micro Shipments With Nvidia, AMD Chips Secretly Fitted With US Trackers To Detect Diversions To China: Report - Advanced Micro Devices (NASDAQ:AMD), Dell Technologies (NYSE:DELL)

U.S. authorities have reportedly placed location tracking devices in targeted shipments of advanced AI chips at high risk of illegal diversion to China. Federal Authorities Deploy Covert Tracking Technology The measures target AI chips being diverted to destinations under U.S. export restrictions and apply only to select shipments under investigation, Reuters reported, citing sources. Five additional supply chain participants confirmed to Reuters that trackers are hidden in server packaging from Dell Technologies Inc. DELL and Super Micro Computer Inc. SMCI, containing chips from NVIDIA Corp. NVDA and Advanced Micro Devices Inc. AMD. Enforcement Strategy Intensifies Under New Administration The tracking initiative demonstrates the lengths authorities will go to enforce chip export restrictions on China, even as the Trump administration agreed to allow limited AI chip sales with revenue-sharing arrangements. In one 2024 case, Dell servers with Nvidia chips included large trackers on shipping boxes and smaller devices hidden inside packaging and within servers themselves. The Commerce Department's Bureau of Industry and Security typically oversees operations, with Homeland Security Investigations and the Federal Bureau of Investigation potentially involved. Companies Respond to Tracking Reports Super Micro declined to comment on tracking actions, stating it doesn't disclose "security practices and policies in place to protect our worldwide operations, partners, and customers." Dell said it is "not aware of a U.S. Government initiative to place trackers in its product shipments," according to the report. Nvidia declined to comment. AMD did not immediately respond to Benzinga's request for comment. Market Context Amid Export Controls The U.S. dominates global AI chip supply chains and restricts exports to limit China's military modernization. Recent reports show Nvidia agreed to pay the U.S. government 15% of China AI chip revenues under new licensing conditions. China represents roughly 13% of Nvidia's total revenue at $17 billion, while AMD faces 24% exposure at $6.2 billion. Read Next: Top Wall Street Forecasters Revamp Brinker International Expectations Ahead Of Q4 Earnings Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Gabriel Pahontu/Shutterstock AMDAdvanced Micro Devices Inc$176.971.15%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum87.91Growth92.12Quality74.27Value11.46Price TrendShortMediumLongOverviewDELLDell Technologies Inc$141.60-0.03%NVDANVIDIA Corp$183.06-0.05%SMCISuper Micro Computer Inc$46.460.06%Market News and Data brought to you by Benzinga APIs

The U.S. Is Reportedly Adding Location Tracking Mechanisms to AI Server Shipments, Despite NVIDIA's Opposition, With Many Removed by Chip Resellers in China

Well, it seems that server manufacturers have started implementing 'backdoor measures' into AI server shipments, which China has caught, raising massive concerns for NVIDIA's future in the region. The uncertainty around NVIDIA and China is at its peak now, probably higher than when the export controls initially came in. Beijing has been vocal against backdoors in NVIDIA's AI chips, and despite the GPU manufacturer saying there are no security risks with its chips, it seems like China isn't satisfied, and now we know why. A report on Reuters claims that US authorities have been "secretly" placing location tracking devices into advanced chips, with firms like Dell and Supermicro involved. The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said. Well, things aren't looking great for NVIDIA right now, as server manufacturers are allegedly involved in creating backdoors for equipment shipped to China. US lawmakers have been voicing support for integrating mechanisms in AI chips that help the nation figure out end-users and ensure that equipment doesn't end up in the wrong place, and location tracking devices are being used for this purpose. Supply chain sources say that Dell, Supermicro, and several AI server manufacturers are hiding tracking devices in their packages. It is claimed that the trackers are as large as smartphones, and many Chinese chip resellers have received newer shipments of these devices. This raises huge concerns for Beijing, which has opened up an investigation into such backdoors, and the existence of security breaches could lead to NVIDIA not being able to sell its AI chips in the region. NVIDIA has declined to comment, and we are also gathering further information.

Exclusive-US embeds trackers in AI chip shipments to catch diversions to China, sources say

SINGAPORE/NEW YORK (Reuters) -U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic. The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said. They show the lengths to which the U.S. has gone to enforce its chip export restrictions on China, even as the Trump administration has sought to relax some curbs on Chinese access to advanced American semiconductors. The trackers can help build cases against people and companies who profit from violating U.S. export controls, said the people who declined to be named because of the sensitivity of the issue. Location trackers are a decades-old investigative tool used by U.S. law enforcement agencies to track products subject to export restrictions, such as airplane parts. They have been used to combat the illegal diversion of semiconductors in recent years, one source said. Five other people actively involved in the AI server supply chain say they are aware of the use of the trackers in shipments of servers from manufacturers such as Dell and Super Micro, which include chips from Nvidia and AMD. Those people said the trackers are typically hidden in the packaging of the server shipments. They did not know which parties were involved in installing them and where along the shipping route they were put in. Reuters was not able to determine how often the trackers have been used in chip related investigations or when U.S. authorities started using them to investigate chip smuggling. The U.S. started restricting the sale of advanced chips by Nvidia, AMD and other manufacturers to China in 2022. In one 2024 case described by two of the people involved in the server supply chain, a shipment of Dell servers with Nvidia chips included both large trackers on the shipping boxes and smaller, more discreet devices hidden inside the packaging -- and even within the servers themselves. A third person said they had seen images and videos of trackers being removed by other chip resellers from Dell and Super Micro servers. The person said some of the larger trackers were roughly the size of a smartphone. The U.S. Department of Commerce's Bureau of Industry and Security, which oversees export controls and enforcement, is typically involved, and Homeland Security Investigations and the Federal Bureau of Investigation, may take part too, said the sources. The HSI and FBI both declined to comment. The Commerce Department did not respond to requests for comment. The Chinese foreign ministry did not have immediate comment. Super Micro said in a statement that it does not disclose its "security practices and policies in place to protect our worldwide operations, partners, and customers." It declined to comment on any tracking actions by U.S. authorities. Dell said it is "not aware of a U.S. Government initiative to place trackers in its product shipments." Nvidia declined to comment, while AMD did not answer a request for comment. CHIP RESTRICTIONS The United States, which dominates the global AI chip supply chain, has sought to limit exports of chips and other technology to China in recent years to restrain its military modernization. It has also put restrictions on the sale of chips to Russia to undercut war efforts against Ukraine. The White House and both houses of Congress have proposed requiring U.S. chip firms to include location verification technology with their chips to prevent them from being diverted to countries where U.S. export regulations restrict sales. China has slammed the U.S. exports curbs as part of a campaign to suppress its rise and criticized the location tracking proposal. Last month, the country's powerful cyberspace regulator summoned Nvidia to a meeting to express its concerns over the risks of its chips containing "backdoors" that would allow remote access or control, which the company has strongly denied. In January, Reuters reported the U.S. had traced organized AI chip smuggling to China via countries such as Malaysia, Singapore, and the UAE -- but it is unclear if tracking devices were involved. The use of trackers by U.S. law enforcement goes back decades. In 1985, Hughes Aircraft shipped equipment subject to U.S. export controls, according to a court decision reviewed by Reuters. Executing a search warrant, the U.S. Customs Service intercepted the crate at a Houston airport and installed a tracking device, the decision noted. U.S. export enforcement agents sometimes install trackers after getting administrative approval. Other times they get a judge to issue a warrant authorizing use of the device, one source said. With a warrant, it is easier to use the information as evidence in a criminal case. A company may be told about the tracker, if they are not a subject of the investigation, and may consent to the government's installation of the trackers, the source added. But the devices can also be installed without their knowledge. People involved in diverting export-controlled chip and server shipments to China said they were aware of the devices. Two of the supply chain sources, who are China-based resellers of export-controlled chips, said they regularly took care to inspect diverted shipments of AI chip servers for the trackers due to the risks of the devices being embedded. An affidavit filed with a U.S Department of Justice complaint regarding the arrests of two Chinese nationals charged with illegally shipping tens of millions of dollars' worth of AI chips to China earlier this month describes one co-conspirator instructing another to check for trackers on Quanta H200 servers, which contain Nvidia chips. It said the English language text was sent by a co-conspirator, whose name was redacted, to one of the defendants, Yang Shiwei. "Pay attention to see if there is a tracker on it, you must look for it carefully," said the person, who went on to call the Trump administration by an obscenity. "Who knows what they will do." (Reporting by Fanny Potkin and Jun Yuan Yong in Singapore, Karen Freifeld in New York; Additional reporting by China newsroom; Editing by Lincoln Feast.)