US authorities have secretly placed tracking devices in certain shipments of advanced chips to monitor illegal diversions to China, according to sources with direct knowledge.

The trackers are used on select shipments under investigation to enforce US export controls, often in servers from brands like Dell and Super Micro that include chips from manufacturers such as Nvidia and AMD.

These devices, sometimes hidden inside packaging or within the servers themselves, help build cases against those violating export restrictions.

The US began restricting sales of advanced chips to China in 2022 and has also placed restrictions on exports to Russia.

Officials from the Bureau of Industry and Security are typically involved, and Homeland Security Investigations and the FBI may also take part.

China-based resellers said they are aware of the trackers and inspect diverted shipments for them.

Dell said it is not aware of any US government program involving trackers. Nvidia declined to comment, while AMD did not respond to a request for comment.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Export control enforcement has evolved from reactive investigations to proactive tracking operations

The use of GPS trackers in chip shipments represents a significant escalation in how U.S. authorities monitor export violations, building on decades of enforcement experience.

Tracking devices have been used in export control cases since at least 1985, when U.S. Customs installed a device in Hughes Aircraft equipment at Houston airport as part of a search warrant1.

More recently, investigators have used similar techniques to monitor other trade violations—a 2016 Basel Action Network study placed GPS trackers in 200 old electronics to trace e-waste disposal, finding that about one-third were illegally exported overseas2.

The current chip tracking program shows authorities have moved beyond investigating individual cases to systematically monitoring high-risk shipments before violations occur.

This proactive approach reflects the scale of the enforcement challenge, given that China represented 31.4% of global semiconductor purchases in 2022, making it difficult to distinguish legitimate from diverted shipments3.

2️⃣ Smugglers’ awareness of tracking creates an ongoing technological arms race

The fact that chip smugglers actively search for tracking devices reveals how enforcement measures drive counter-surveillance tactics in illegal trade networks.

Court documents show co-conspirators instructing each other to “Pay attention to see if there is a tracker on it, you must look for it carefully,” indicating widespread knowledge of the tracking program among those involved in chip diversion.

China-based resellers now “regularly took care to inspect diverted shipments of AI chip servers for the trackers,” suggesting this has become standard practice in illegal supply chains.

The trackers vary in size from smartphone-sized devices on shipping boxes to smaller units hidden within the servers themselves, showing authorities are adapting their concealment methods as smugglers become more sophisticated in detection.

This pattern mirrors other enforcement scenarios where each side continuously adapts to the other’s tactics, potentially driving innovation in both tracking technology and detection methods.

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