U.S. authorities have quietly placed location-tracking devices in select shipments of advanced semiconductors as part of a targeted effort to stop illegal diversions to China. According to people with direct knowledge of the practice, these trackers are installed only in shipments already under investigation for potential export violations.
The covert devices are a key element of Washington’s enforcement of export restrictions on high-performance chips. While the Trump administration has considered easing some curbs on Chinese access, enforcement agencies are still deploying aggressive tools to detect and build cases against those involved in smuggling restricted technology.
A Tool With a Long History
Tracking technology is not new for U.S. investigators. For decades, law enforcement has used it to monitor products covered by export rules, from airplane parts to sensitive electronics. More recently, it has been adapted to follow the movement of semiconductors, particularly those with AI processing capabilities.
Industry sources say trackers are often hidden within packaging for AI servers manufactured by companies like Dell and Super Micro, which contain advanced chips from Nvidia and AMD. Where in the supply chain the trackers are inserted — and who physically installs them — remains unclear.
Hidden in Plain Sight
People working in the AI server supply chain have confirmed they’ve seen these tracking measures firsthand. In one 2024 case, a shipment of Dell servers with Nvidia chips reportedly carried both larger trackers embedded in the shipping boxes and smaller, discreet devices hidden inside the servers themselves.
Other industry participants have seen or been shown images of resellers removing such devices from Dell and Super Micro servers. While the scale of the operation remains unknown, U.S. restrictions on exporting certain advanced AI chips to China have been in place since 2022 to address concerns over potential military use.
Enforcement Agencies and Official Responses
The Bureau of Industry and Security (BIS), part of the U.S. Department of Commerce, is believed to lead these operations, with possible support from Homeland Security Investigations (HSI) and the FBI. Both the FBI and HSI declined to comment, and the Commerce Department has not publicly addressed the practice.
Super Micro said it does not disclose its security measures and declined to comment on any government-led tracking actions. Dell said it was not aware of any such initiative involving its shipments. Nvidia stated that it does not install hidden tracking devices in its products.
Part of a Larger Geopolitical Clash
The U.S., which dominates the global AI chip market, has tightened export rules to prevent its technology from advancing China’s military capabilities. Similar restrictions target Russia in response to the war in Ukraine.
Lawmakers in Washington have gone further, proposing that U.S. chipmakers embed location-verification features into their products to prevent diversions to restricted nations. China has criticized the idea, accusing the U.S. of trying to slow its technological progress.
In July, China’s cyberspace regulator summoned Nvidia to discuss concerns that its chips could contain “backdoors” enabling remote access. Nvidia has denied any such capability.
Smuggling Routes and Earlier Investigations
U.S. authorities have previously identified organized smuggling of AI chips to China through intermediary countries like Malaysia, Singapore, and the United Arab Emirates. It’s unclear whether trackers played a role in those probes.
The method itself has roots in past enforcement cases. In 1985, U.S. Customs intercepted Hughes Aircraft equipment at a Houston airport, installed a tracker, and let it continue to its destination — a tactic now repurposed for the semiconductor era. Depending on the case, trackers can be installed with administrative approval or under a court-issued warrant, which makes it easier to use the data in criminal proceedings.
Awareness Among Shippers and Resellers
In some cases, manufacturers or logistics companies are informed when a tracker is installed — particularly if they are not the investigation’s target — and may even agree to it. But trackers can also be placed without their knowledge.
China-based resellers of export-controlled chips say they regularly inspect diverted AI server shipments for tracking devices, aware that detection could signal active monitoring.
Court documents from a recent U.S. Justice Department case highlight how seriously smugglers take the threat of trackers. In early August, two Chinese nationals were charged with illegally exporting tens of millions of dollars’ worth of AI chips to China.
An affidavit described one participant instructing another to carefully search Quanta H200 servers — equipped with Nvidia chips — for tracking devices before delivery. The warning underscored the risk that such surveillance could expose entire smuggling operations.
