U.S. authorities have reportedly placed location tracking devices in targeted shipments of advanced AI chips at high risk of illegal diversion to China.
Federal Authorities Deploy Covert Tracking Technology
The measures target AI chips being diverted to destinations under U.S. export restrictions and apply only to select shipments under investigation, Reuters reported, citing sources.
Five additional supply chain participants confirmed to Reuters that trackers are hidden in server packaging from Dell Technologies Inc. DELL and Super Micro Computer Inc. SMCI, containing chips from NVIDIA Corp. NVDA and Advanced Micro Devices Inc. AMD.
Enforcement Strategy Intensifies Under New Administration
The tracking initiative demonstrates the lengths authorities will go to enforce chip export restrictions on China, even as the Trump administration agreed to allow limited AI chip sales with revenue-sharing arrangements.
In one 2024 case, Dell servers with Nvidia chips included large trackers on shipping boxes and smaller devices hidden inside packaging and within servers themselves. The Commerce Department’s Bureau of Industry and Security typically oversees operations, with Homeland Security Investigations and the Federal Bureau of Investigation potentially involved.
Companies Respond to Tracking Reports
Super Micro declined to comment on tracking actions, stating it doesn’t disclose “security practices and policies in place to protect our worldwide operations, partners, and customers.” Dell said it is “not aware of a U.S. Government initiative to place trackers in its product shipments,” according to the report.
Nvidia declined to comment. AMD did not immediately respond to Benzinga's request for comment.
Market Context Amid Export Controls
The U.S. dominates global AI chip supply chains and restricts exports to limit China’s military modernization. Recent reports show Nvidia agreed to pay the U.S. government 15% of China AI chip revenues under new licensing conditions.
China represents roughly 13% of Nvidia’s total revenue at $17 billion, while AMD faces 24% exposure at $6.2 billion.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Gabriel Pahontu/Shutterstock
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