Information
U.S. authorities have been covertly placing location tracking devices in selected shipments of advanced AI chips to prevent illegal diversion to countries with export restrictions, particularly China. This operation, coordinated with agencies like the Bureau of Industry and Security and the FBI, targets specific shipments under investigation, including servers containing Nvidia and AMD chips from manufacturers like Dell and Super Micro. The tracking devices, sometimes hidden in packaging or embedded in servers, aid in building cases against violations of U.S. export controls.
These efforts are part of a broader strategy to limit China’s access to cutting-edge AI semiconductors, perceived as vital to curbing Beijing’s military modernisation. Since 2022, the U.S. has tightened export restrictions and proposed requiring built-in location verification in chips. Beijing has criticised these actions as attempts to hinder its technological growth, raising concerns about potential “backdoors” in American chips. Smuggling routes through countries like Malaysia and Singapore remain challenging for enforcement, but the U.S. insists that monitoring is essential to combat sophisticated illicit networks.
Source: Reuters
So What
The covert use of tracking devices escalates the arms race between the U.S. and China, transforming the semiconductor supply chain into a contested security frontier. For the U.S., these devices function as both intelligence tools and deterrents, creating distrust among global partners, especially in Southeast Asia and the Gulf region. Conversely, for China, this situation reinforces the narrative of U.S. “containment,” prompting an intensified effort to increase local semiconductor production and forge alliances with alternative technology partners. This surveillance in trade could further divide the global tech market into rival blocs, making chip technology a significant geopolitical fault line.
Follow us to join the intelligence community!