exclusive: us tracks ai chips headed to china with embedded devices
Washington, Thursday, 14 August 2025.
to prevent illegal diversion of advanced ai chips, us authorities are embedding tracking devices in shipments heading to china. this previously unreported tactic targets high-risk shipments to enforce export restrictions. in one 2024 case, trackers were found not only on the shipping boxes of dell servers containing nvidia chips but also hidden inside the packaging and the servers themselves. this move escalates tensions surrounding technology trade and impacts nvidia’s access and revenue within the chinese market.
Monitoring ai chip shipments
The U.S. government is intensifying its efforts to prevent the illegal diversion of advanced AI chips to China by embedding location tracking devices in targeted shipments [1]. This tactic, implemented by U.S. authorities, aims to enforce export restrictions on high-risk shipments [1]. These trackers are intended to detect if AI chips are being rerouted to destinations that are under U.S. export restrictions [2]. According to sources, these tracking devices can assist in building cases against individuals and companies profiting from violations of U.S. export controls [1].
Supply chain awareness
Those involved in the AI server supply chain are aware of the use of trackers in shipments from manufacturers like Dell and Super Micro [2][3]. These servers often contain chips from Nvidia and AMD [2][3]. The trackers are typically concealed within the packaging of the server shipments [3]. However, it remains unclear who is installing these tracking devices and at which point in the shipping route they are being placed [3]. Some of the larger trackers are approximately the size of a smartphone [3].
Enforcement and reactions
The U.S. Commerce Department’s Bureau of Industry and Security (BIS), along with agencies like Homeland Security Investigations (HSI) and the Federal Bureau of Investigation (FBI), may be involved in these operations [1]. While the FBI and Nvidia have declined to comment, Dell stated they are unaware of the U.S. government installing trackers in their product shipments [2]. China has voiced criticism of U.S. export restrictions [1]. A co-conspirator in one case advised a defendant to check carefully for trackers, indicating awareness among those attempting to circumvent export controls [1][2].
Market implications for nvidia
These increased restrictions and monitoring efforts could significantly impact Nvidia’s market access and revenue in China [1]. The U.S. began restricting the sale of advanced chips to China in 2022, affecting Nvidia, AMD, and other manufacturers [1]. Recent reports suggest that the Chinese government is urging domestic firms to avoid using Nvidia’s H20 processors, particularly in government-related projects [4]. A Taiwanese think tank researcher suggests China aims to reduce reliance on foreign chips for information and economic security, and to support domestic technology development [4].
Investor considerations
Investors should closely monitor the developments surrounding these export controls and tracking measures. The measures may lead to decreased sales for Nvidia and AMD in the Chinese market, potentially impacting their stock valuations. While Nvidia has stated their products do not have backdoors [4], increased scrutiny and the potential for Chinese firms to seek domestic alternatives could pose challenges [4]. The long-term effects on the global AI chip supply chain and the competitive landscape remain uncertain [alert! ‘impact on stock prices can only be speculated, not predicted’] [1][4].