Ahmed Kamel – Egypt Daily News
In a covert effort to tighten enforcement of export controls on advanced semiconductors, U.S. authorities have secretly embedded location tracking devices into select shipments of high-performance AI chips. The initiative, previously unreported, is aimed at preventing the illegal diversion of critical computing technology to China and other restricted destinations, according to sources with direct knowledge of the matter.
The tracking devices some concealed inside packaging, others reportedly hidden within the servers themselves have been deployed in shipments of servers equipped with chips from leading manufacturers such as Nvidia and AMD. The servers, produced by companies including Dell and Super Micro, are often used in artificial intelligence applications and are subject to stringent U.S. export controls due to their potential military and surveillance uses.
Two people familiar with the U.S. government’s enforcement tactics said the trackers are installed only in shipments considered high risk and under investigation. The devices serve to monitor movement and detect redirections of goods to prohibited end-users or locations, particularly within China. The sources requested anonymity due to the sensitive and classified nature of the surveillance operations.
These efforts represent an aggressive escalation in Washington’s attempts to prevent advanced American semiconductor technology from reaching adversaries, particularly amid growing geopolitical and technological competition with China. Since 2022, the U.S. has imposed sweeping restrictions on the export of high-end AI chips to China, citing concerns over their use in military modernization and state-led surveillance programs.
Tactics Rooted in Decades of Export Enforcement
While the embedding of trackers in chip shipments may seem novel, the method itself is rooted in long-standing law enforcement practices. U.S. agencies have employed tracking devices for decades in cases involving restricted exports, including aircraft parts and missile technologies. A 1985 case involving Hughes Aircraft saw authorities install a tracker in export-controlled equipment at a Houston airport to monitor its movement abroad.
In the context of semiconductors, the use of trackers appears to be part of a broader, more aggressive enforcement strategy. One source indicated that the Commerce Department’s Bureau of Industry and Security (BIS), which oversees export controls, is leading the effort, with support from the Department of Homeland Security and the FBI. Both the FBI and Homeland Security Investigations declined to comment. The Commerce Department did not respond to requests for comment.
While tracking devices are typically deployed with either administrative approval or court-issued warrants depending on whether authorities seek to use the data in criminal proceedings the shipments’ recipients are not always aware of the surveillance. In some cases, U.S. authorities inform companies if they are not the subject of the investigation and secure their consent. In others, trackers are installed without the company’s knowledge.
Supply Chain Awareness and Avoidance Tactics
Within the AI server supply chain, knowledge of these trackers is no longer confined to law enforcement circles. Five industry insiders confirmed awareness of tracking devices being used in shipments, particularly those routed through resellers or distributors operating in Asia. Some reported seeing images and videos of trackers being removed from servers produced by Dell and Super Micro. One individual described some devices as being as large as a smartphone, while others were embedded discretely within the hardware.
Two China-based chip resellers admitted to routinely checking shipments for tracking devices before forwarding them to buyers. The risk of detection, they noted, has prompted greater caution among actors engaged in circumventing U.S. export laws.
A recent U.S. Department of Justice complaint sheds further light on this surveillance tactic. The affidavit describes communications between individuals accused of smuggling tens of millions of dollars’ worth of AI chips to China. In one instance, a co-conspirator instructs an accomplice to “pay attention to see if there is a tracker on it” while inspecting a shipment of Quanta H200 servers containing Nvidia chips. The message included an obscenity directed at the Trump administration and warned, “Who knows what they will do.”
Tech Companies Respond
Technology firms linked to the tracked shipments have offered limited public comment. Dell stated it was “not aware of a U.S. Government initiative to place trackers in its product shipments.” Super Micro, citing security protocol, declined to disclose operational details related to customer or government engagements. Nvidia, whose chips are central to the AI boom and to U.S. export restrictions, firmly denied involvement: “We don’t install secret tracking devices in our products,” the company said. AMD did not respond to inquiries.
The use of trackers raises questions not only about privacy and supply chain integrity but also about the mounting friction between the U.S. and China over control of critical technologies.
Export Controls and the Global Chip War
The United States dominates the global supply chain for advanced AI chips, and its export policies carry significant geopolitical weight. Since 2022, Washington has increasingly restricted the sale of high-performance chips and semiconductor equipment to China, arguing that the technology could be used for military advancements and mass surveillance programs.
The restrictions have also extended to Russia, as the U.S. seeks to undercut its military capabilities amid the ongoing war in Ukraine. In January, Reuters reported that U.S. authorities had traced elaborate smuggling operations rerouting AI chips through third countries including Malaysia, Singapore, and the UAE.
In response to the growing pressure, the Biden administration and Congress have proposed new measures, including a requirement that U.S. chipmakers embed location-verification technologies into sensitive hardware to ensure compliance with export laws. China, meanwhile, has denounced the restrictions as part of a broader campaign to stifle its technological rise. Last month, China’s cyberspace regulator summoned Nvidia to raise concerns over alleged “backdoors” in its chips an accusation the company strongly denied.
Strategic Implications
The quiet placement of trackers in AI chip shipments highlights a new dimension of the escalating technology conflict between the U.S. and China. It reveals the lengths to which American authorities are willing to go to monitor and disrupt illicit supply chains, and it underscores the growing sophistication and paranoia within the global semiconductor trade.
While the full scope and frequency of the practice remain unclear, the message is unmistakable: the U.S. is watching. For actors seeking to profit by skirting export rules, even the hardware itself may be carrying evidence.
