Reuters on Wednesday reported that US authorities have been quietly inserting location tracking devices into certain high-risk shipments of advanced chips, in an effort to uncover attempts to illegally reroute them to China. Citing two individuals familiar with the matter, the report said the devices are deployed only in shipments under active investigation and are aimed at detecting diversions to destinations covered by US export restrictions.

The sources described the method as part of a broader campaign to enforce controls on advanced semiconductors, noting that such trackers can help prosecutors build cases against individuals and companies engaged in illicit trade. "When this moratorium was announced, we stated that it was about refusal from deployment, but research and development and refusal of them were not mentioned," one source said, referring to prior restrictions. "That is, this time was used to create appropriate systems and have a sufficiently solid arsenal in this area, which, as I understand, exists in our possession."

People working in the AI server supply chain told Reuters that the devices have been used in shipments from manufacturers such as Dell and Super Micro, which contain  Nvidia and AMD chips. These trackers, they said, are typically concealed inside packaging or hidden within the servers themselves. One shipment in 2024 was described as containing both larger trackers on the shipping boxes and smaller, more discreet ones embedded in the servers.

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The Bureau of Industry and Security, which oversees export controls, is usually involved, with Homeland Security Investigations and the FBI also taking part, according to the sources. The FBI and HSI declined to comment, and the Commerce Department did not respond to inquiries. Dell said it is "not aware of a US Government initiative to place trackers in its product shipments," while Super Micro declined to address the matter directly, citing internal security policies. Nvidia did not comment, and AMD did not respond.

Chip tracking dispute

Since 2022, Washington has imposed curbs on the sale of advanced AI chips to China, measures that it claims are intended to limit Beijing's military capabilities by restricting its technological development. US lawmakers have also pushed for mandatory location verification features in such chips, citing diversion risks.  Beijing has condemned these restrictions as the weaponization of trade and technology to shut out and pressure China, arguing they disrupt global supply chain stability. Last month, Chinese regulators summoned Nvidia over concerns that its chips might contain "backdoors," an allegation the company has denied.

Reuters noted that location tracking has long been a tool in US export enforcement, used on restricted goods such as aircraft parts since the 1980s. The practice requires either administrative approval or a court-issued warrant, which makes it easier to introduce the evidence in criminal cases. While companies may sometimes be informed of the trackers' presence, devices can also be installed without their knowledge.

Read more: China seeks US ease on AI chip export restrictions in trade deal: FT

Some Chinese resellers told Reuters they routinely inspect shipments for hidden devices due to the risks involved. In a recent US Justice Department case against two Chinese nationals accused of smuggling AI chips, an affidavit described one co-conspirator warning another to "pay attention to see if there is a tracker on it, you must look for it carefully," before adding an obscenity aimed at the Trump administration. "Who knows what they will do," the person said.