US placing trackers in AI chip shipments to prevent diversion to China - report

[US sanctions on the production of Chinese microchips. Prohibition of Chinese microelectronics and communication systems.]
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U.S. authorities have secretly embedded location tracking devices in some targeted shipments of advanced chips they see as being at risk of illegal diversion to China, Reuters reported, citing people with knowledge of the law enforcement tactic.

The move intends to detect AI chips being diverted to places which are under U.S. export curbs, and apply only to select shipments under investigation, the report added [https://www.reuters.com/world/china/us-embeds-trackers-ai-chip-shipments-catch-diversions-china-sources-say-2025-08-13/].

The trackers can help build cases against people and companies who profit from breaching U.S. export restrictions, according to the report.

The report added that some people involved in the AI server supply chain say they are aware of the use of the trackers in shipments of some servers from companies like Dell Technologies (NYSE:DELL [https://seekingalpha.com/symbol/DELL]) Super Micro (NASDAQ:SMCI [https://seekingalpha.com/symbol/SMCI]), which include chips from Nvidia (NASDAQ:NVDA [https://seekingalpha.com/symbol/NVDA]) and AMD (NASDAQ:AMD [https://seekingalpha.com/symbol/AMD]).

These people noted that the trackers are usually hidden in the packaging of the server shipments. They did not know which parties were involved in installing them or where in the shipping route they were placed in, the report added.

The media outlet was unable to determine how often the trackers were used in chip related probes or when U.S. authorities began using them to investigate chip smuggling.

In one 2024 case told by two of the people involved in the server supply chain, noted that a shipment of Dell servers with Nvidia chips included large trackers on the shipping boxes and even smaller more discreet devices hidden in the packaging, and even within the servers, the report noted.

Another person noted that they had seen images and videos of trackers being removed by other chip resellers from Dell and Super Micro servers. The person added that some of the larger trackers were around the size of a smartphone, the report added.

The U.S. Department of Commerce, AMD, Dell, Nvidia and Super Micro did not immediately respond to a request for comment from Seeking Alpha.

Super Micro said in a statement to the media outlet 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, the report added.

Dell said it is “not aware of a U.S. Government initiative to place trackers in its product shipments,” according to the report.

U.S. export enforcement agents sometimes place trackers after getting administrative approval. At other times they get a judge to issue a warrant to get an approval for using the device, the report added citing a source.

A company may be informed about the tracker, if they are not a subject of the probe and may consent to the government’s installation of the trackers, the report added citing the source. However, the devices can also be installed without their knowledge.

Two of the supply chain sources, who are China-based resellers of export-controlled chips, noted that they regularly paid attention to inspect diverted shipments of AI chip servers for the trackers because of the risks of the devices being embedded, the report noted.

An affidavit submitted with a U.S Department of Justice complaint related to the arrests of two Chinese nationals charged with illegally shipping AI chips to China earlier this month noted how one co-conspirator instructed another to check for trackers on Quanta H200 servers, which consist of Nvidia chips, the report added.

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