In an effort to prevent the diversion of advanced artificial intelligence chips to China, the US government is embedding tracking devices in certain shipments.
Covert Surveillance on the AI Chip Supply Chain
The trackers are selectively applied, depending on active investigations. Targets include servers from US hardware makers like Dell Technologies and Super Micro that feature AI-optimized chips from Nvidia and AMD. Once installed, the trackers can transmit location data, allowing authorities to determine if shipments arrive at declared destinations or end up in prohibited locations such as mainland China.
Legislative Momentum and Industry Pushback
The US Congress and White House are working on mandating US chip firms to add location verification technology to their chips to prevent them from being shipped to blacklisted countries. China has criticized such controls, accusing the US of 'economic coercion' and warning that embedded devices could serve as 'backdoors' for espionage. This led to the Chinese cyberspace regulator summoning Nvidia for discussions. Despite Nvidia publicly denying that its products contain such access points, the allegation reflects increasing mistrust in US-China tech relations.
Smuggling Networks Adapt
US authorities have intensified action against smuggling networks moving chips into China through third countries such as Malaysia, Singapore, and Vietnam. In one recent Justice Department complaint, alleged smugglers were found to have instructed associates to 'check for trackers' before rerouting servers, indicating growing awareness of the devices' existence among perpetrators. Two Chinese nationals were recently arrested in the US over allegations of exporting millions of dollars’ worth of AI chips to China in at least 20 separate shipments.
The embedding of trackers in the AI chip supply chain illustrates Washington's resolve to prevent high-performance AI hardware from aiding China's military or surveillance apparatus. With legislative proposals and operational enforcement advancing in tandem, the US appears to be moving towards a more permanent system of location verification for sensitive exports.
