US Reportedly Hid Trackers in Shipments to Monitor AI Chips Diverted to China – Source: www.techrepublic.com

US authorities embedded location-tracking devices in select shipments of servers containing high-performance AI chips in an effort to monitor potential diversions to China, Reuters reported on Aug. 13. The shipments included servers from Dell and Super Micro containing NVIDIA and AMD chips capable of powering artificial intelligence systems.

Why were location trackers placed on shipments of chips?

The tracking operation was designed to help law enforcement build cases against individuals or entities suspected of violating US export controls, according to Reuters. Sources did not disclose which agencies were responsible for installing the trackers or which shipping routes were involved.

The trackers were typically embedded in the packaging of the servers being shipped. In some cases, tracking devices were also placed within the servers, though certain shipments contained multiple trackers in different locations. Some trackers were reportedly as large as smartphones.

While Reuters was unable to determine the full timeline of the surveillance program, one instance reportedly occurred in 2024.

The use of tracking devices in export enforcement is not unprecedented. Law enforcements have employed similar tactics in the past to monitor restricted goods such as aircraft parts, Reuters noted.

Their sources alleged the US Department of Commerce’s Bureau of Industry and Security, Homeland Security Investigations, and the Federal Bureau of Investigation may be involved. All three agencies, along with China’s foreign ministry, declined to comment, according to Reuters.

AI processors have become a political bargaining chip

AI chips have become a point of leverage in the technological competition between the US and China. Since 2022, the US restricts sales of its most powerful AI chips to China, prompting companies like NVIDIA to develop downgraded versions, such as H20, to comply with regulations. Earlier this week, NVIDIA and AMD agreed to pay 15% of their AI revenue to the US government in order to sell H20 chips in China.

In July, China alleged H20 chips could secretly track users, a claim NVIDIA has firmly denied. However, a bipartisan group of US lawmakers introduced a bill in mid-May that would require AI chipmakers to verify their products’ locations before export.

Deepfakes and the rate at which AI can create assets that then need to be secured keeps cyber experts up at night, TechRepublic learned at last week’s Black Hat conference.