US embeds trackers in AI chip shipments to catch diversions to China, sources say
US 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.
According to Reuters, the measures aim to detect AI chips being diverted to destinations which are under US export restrictions, and apply only to select shipments under investigation, the people said.
They show the lengths to which the US 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 US 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 US 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 inserted.
Reuters was not able to determine how often the trackers have been used in chip-related investigations or when US authorities started using them to investigate chip smuggling. The US 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 US 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.
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 US authorities.
Dell said it is “not aware of a US Government initiative to place trackers in its product shipments.”
Nvidia said, "We don't install secret tracking devices in our products."
AMD did not answer a request for comment.
