The United States is reportedly placing hidden tracking devices in some shipments of advanced artificial intelligence (AI) chips to detect and prevent illegal transfers to China. The devices have been embedded in high-risk shipments containing AI processors from companies like Nvidia and AMD, often delivered inside servers made by Dell and Super Micro Computer. In some cases, the trackers are hidden in packaging, while in others they are covered within the servers themselves, reports Reuters.
With this latest measure, the aim is to follow the chips’ movement after export and identify smuggling networks. According to the report, officials from agencies, including the Commerce Department’s Bureau of Industry and Security, Homeland Security Investigations, and the FBI, are believed to be involved in the operation. This comes after Senator Tom Cotton proposed the ‘Chip Security Act’ in May 2025 to require location tracking in export-controlled AI chips, and Representative Bill Foster suggested on-chip verification. The White House is also said to be considering GPS-free tracking methods.
Notably, tracking devices have long been used by US authorities to monitor other sensitive goods, like aircraft components. But the focus on AI chips marks a new front in the technology export battle, reflecting their growing importance in computing, defense, and artificial intelligence research.
The latest measure is also a part of the United States’ wider enforcement of restrictions first introduced in 2022, which ban the sale of top-tier semiconductors to China over concerns they could be used in military projects or advanced surveillance systems. The timing of the development becomes more interesting as recent reports revealed that around $1 billion worth of Nvidia’s AI chips (including the H100, H200, and even the advanced B200) were smuggled into China despite the US export ban.
Meanwhile, the latest report also revealed that resellers in China (aware of the risk) have begun checking diverted shipments for tracking devices. Just days ago, Chinese authorities reportedly told domestic firms to avoid using Nvidia’s H20 AI chips, especially in government or national security projects. Last month, the Cyberspace Administration of China summoned Nvidia over alleged security risks, suspecting the chip may contain hidden ‘backdoor’ functions like user tracking.
The move also comes as some recent reports suggest that Chinese companies are using Malaysia and Thailand to bypass existing US bans on direct exports of advanced AI chips to China. In response, the President Donald Trump-led government is reportedly planning to impose new restrictions on the sale of such processors to the two Southeast Asian nations. Under the proposal, American chipmakers like Nvidia, AMD, and others would need to obtain special licenses to ship high-end chips to Malaysia and Thailand. The step is significant as Malaysia is a major hub for chip assembly and testing, exporting $37 billion in semiconductors in 2024, over a third of which went to China and Hong Kong. Thailand also increased its chip exports to China to about $815 million last year.
