August 13, 2025 • Technology
US authorities have launched an unprecedented surveillance operation, secretly embedding location tracking devices in targeted shipments of advanced AI chips deemed at high risk of illegal diversion to China. This previously unreported law enforcement tactic represents a dramatic escalation in America's efforts to enforce semiconductor export restrictions, even as the Trump administration has moved to relax some limitations on Chinese access to advanced American technology.
According to sources familiar with the operation, these covert tracking measures apply specifically to select shipments under active investigation. The initiative demonstrates the extraordinary lengths the US government will go to monitor and control the flow of critical AI technology, particularly to strategic rivals like China and Russia.
The tracking devices are strategically hidden throughout AI server shipments from major manufacturers including Dell and Super Micro Computer, which contain high-performance chips from industry leaders Nvidia and AMD. Supply chain sources reveal that trackers are typically concealed within the packaging of server shipments, though the exact parties responsible for installation and their placement along shipping routes remain unclear.
In one documented 2024 case, a single shipment of Dell servers containing Nvidia chips was equipped with multiple surveillance devices. The operation included large trackers attached to shipping boxes, smaller discrete devices hidden inside packaging materials, and even tracking hardware embedded within the servers themselves. Some of the larger tracking devices measure approximately the size of a smartphone, according to industry sources.
The surveillance network involves multiple federal agencies working in coordination. The Commerce Department's Bureau of Industry and Security, which oversees export controls and enforcement, typically leads these operations. Homeland Security Investigations and the Federal Bureau of Investigation may also participate depending on the specific case and suspected violations.
Location tracking technology has served as a cornerstone of US export control enforcement for decades. Historical records show that as early as 1985, US Customs Service agents intercepted and installed tracking devices in Hughes Aircraft equipment shipments at Houston airport under search warrant authorization. This established precedent has evolved to address modern semiconductor smuggling operations.
US export enforcement agents follow established procedures when deploying tracking technology. In some cases, they obtain administrative approval before installation. For more serious investigations, agents secure judicial warrants authorizing device use, which provides stronger legal foundation for using gathered information as criminal evidence.
Companies may be informed about tracker installation if they are not subjects of the investigation and may consent to government placement of devices. However, tracking hardware can also be installed without company knowledge, depending on the specific circumstances and legal requirements of each case.
The semiconductor smuggling community has become increasingly aware of these surveillance tactics. China-based resellers of export-controlled chips regularly inspect diverted shipments of AI servers for embedded tracking devices due to the significant risks associated with their presence. This cat-and-mouse game between enforcement agencies and smugglers has created a sophisticated underground economy built around detecting and removing government surveillance equipment.
Recent Department of Justice complaints provide concrete evidence of this awareness among criminal networks. In a case involving two Chinese nationals charged with illegally shipping tens of millions of dollars worth of AI chips to China, court documents reveal explicit instructions between co-conspirators to search for tracking devices on Quanta H200 servers containing Nvidia chips. One message specifically warned: 'Pay attention to see if there is a tracker on it, you must look for it carefully. Who knows what they will do.'
This tracking initiative operates within the larger framework of escalating US-China technological competition. The United States, which dominates the global AI chip supply chain, has systematically implemented export restrictions on advanced semiconductors to limit China's military modernization capabilities. Similar restrictions apply to Russia as part of efforts to undermine its war capabilities in Ukraine.
The tracking program coincides with legislative proposals from both the White House and Congress requiring US chip manufacturers to embed location verification technology directly into their products. These measures would prevent semiconductors from reaching countries subject to export restrictions, though China has criticized such proposals as part of a broader campaign to suppress its technological advancement.
China's cybersecurity regulator recently summoned Nvidia executives to express concerns about potential 'backdoors' in chips that could enable remote access or control. The company has strongly denied these allegations, but the interaction highlights the deepening mutual suspicion between the world's two largest economies over semiconductor technology.
The revelation of widespread tracking operations has significant implications for global technology supply chains. Major manufacturers like Dell have stated they are 'not aware of a US government initiative to place trackers in product shipments,' while Super Micro Computer declined to comment on specific tracking activities, citing security protocols for protecting worldwide operations.
This surveillance program extends beyond simple export control enforcement to encompass broader national security objectives. US authorities have traced organized AI chip smuggling operations through intermediary countries including Malaysia, Singapore, and the UAE, though it remains unclear whether tracking devices played a role in uncovering these networks.
The tracking initiative represents a new frontier in export control enforcement, where physical products become intelligence assets capable of providing real-time location data to government agencies. As AI technology continues to drive geopolitical competition, such surveillance measures may become standard practice for monitoring critical technology transfers.
The secret deployment of tracking devices in AI chip shipments signals a fundamental shift in how nations approach technology export controls. Traditional restrictions focused on preventing initial sales, but this surveillance approach enables ongoing monitoring of products after they leave manufacturer facilities. The program suggests that future AI technologies may be subject to even more extensive monitoring and control measures.
As the global AI industry continues expanding, with companies developing increasingly powerful systems, the tension between commercial interests and national security concerns will likely intensify. The tracking program demonstrates that governments are willing to implement sophisticated surveillance measures to maintain technological advantages, potentially reshaping how international technology trade operates in the years ahead.