Latest news with #AIchips
Gizmodo
4 hours ago
- Business
- Gizmodo
U.S. Allegedly Super-Charged Its Efforts to Prevent China From Getting American Chips
The Trump administration has made curbing China's access to high-powered AI chips a high priority. According to the government, China may use the chips to build up its arsenal of military technology, and it simply can't have that. At the same time, America's considerable and longstanding chip export controls may also be aimed at slowing China's own chip industry. Now, a report from Reuters claims that the government has been embedding location tracking devices in AI chip shipments, in an effort to police potential diversions of the tech to America's geopolitical foe. Reuters reports that sources with knowledge of the policy claim that the U.S. Department of Commerce's Bureau of Industry and Security, America's export enforcement agency, is 'typically involved' with such operations. Those same sources claim that the FBI and Homeland Security Investigations 'may take part too.' Gizmodo reached out to the agencies and the Trump administration for comment. The tracking devices are reportedly being placed in 'targeted shipments' of AI chips. Those shipments are being chosen because authorities view them as being at 'high risk of illegal diversion to China.' The point of the trackers is to punish companies or individuals who may violate U.S. export controls. Sources also said that the trackers have been used in server shipments from prominent manufacturers, including Dell and Super Micro, which include chips made by AMD and Nvidia. An Nvidia spokesperson told Gizmodo, 'We don't install secret tracking devices in our products,' full stop. They also referred us to a recently published company blog that states: 'There are no back doors in NVIDIA chips. No kill switches. No spyware. That's not how trustworthy systems are built — and never will be.' The 'chip war' has, to some degree, always been a thing, and governments, particularly the U.S., have always fought for a competitive advantage when it comes to the semiconductor industry. The advent of the AI chip has only upped the ante, as nations fight for dominance over the emerging field of generative AI, and all the potential applications (military included) it may have. At the same time, the Trump administration has sent mixed messages on this issue, as Trump recently claimed he would be open to allowing Nvidia to sell a 'scaled-down' version of its GPU chip to China. The American practice of embedding hidden, Trojan-horse-style surveillance applications inside commercial hardware and software exports is also not new. When the Edward Snowden revelations originally broke in 2014, one of the bombshells at the time was the apparent revelation that the NSA routinely embeds 'backdoor surveillance tools' inside routers and other computer hardware before they are sent on to foreign nations.
Daily Mail
12 hours ago
- Business
- Daily Mail
Report: US embeds trackers in AI shipments
The Trump administration is cracking down on illegal AI chip shipments to China by placing tracking devices inside the packages. U.S. authorities are tracing AI chips that are being diverted from their destinations by smugglers and sold to countries with export restrictions, according to a report from Reuters. Sources told Reuters the trackers are placed in shipments of servers from large U.S. chip makers, including Nvidia and AMD. Moreover, server manufacturers such as Dell and Super Micro are equipped with US trackers. The tracking devices are reportedly placed in the packaging of the server shipments. A variety of US agencies are involved in the effort, including the Bureau of Industry and Security, Homeland Security Investigations, and the Federal Bureau of Investigation. The report was unable to determine when the trackers are installed on the chips during the shipping process. However, in one case, trackers were placed inside the packaging of a shipment of Dell servers with Nvidia chips . Authorities even found a way to hide the trackers within the servers themselves, Reuters reported. Chip smugglers have, in some cases, discovered the tracking devices and removed them from Dell and Super Micro servers. Reports state the largest trackers were approximately the size of a cell phone. Following the report, Dell released a statement claiming the company is 'not aware of a U.S. Government initiative to place trackers in its product shipments.' Meanwhile, Super Micro told Reuters it will not discuss its 'security practices and policies in place to protect our worldwide operations, partners, and customers.' The U.S. has sought to control the flow of AI chip exports in recent years to curb China's technological advancement of its military. Restrictions were also placed on Russia following the invasion of Ukraine. In the past, congressional lawmakers have urged U.S. chip makers to install location verification technology on their products to help combat smugglers. Despite these restrictions, Trump on Monday made a deal with Nvidia and AMD to ship certain AI chip products to China. The companies agreed to pay the US government 15 percent of their revenue from sales of AI chips. The White House indicated on Tuesday that future deals could be on the table for other chip makers.
CTV News
13 hours ago
- Business
- CTV News
Trump's unusual Nvidia deal raises new corporate and national security risks, lawmakers and experts say
U.S. President Donald Trump upended decades of U.S. national security policy, creating an entirely new category of corporate risk, when he made a deal with Nvidia to give the U.S. government a cut of its sales in exchange for resuming exports of banned AI chips to China. Historically, the U.S. government made decisions to control the export of sensitive technologies on national security grounds. Those decisions were viewed as non-negotiable; if a technology was controlled, companies could not buy their way around those controls, no matter how lucrative the foregone foreign sales. On Monday, Trump raised the prospect of ending that era, saying he would allow Nvidia to sell its H20 chips to China in exchange for the U.S. government receiving a 15 per cent cut of the company's sales of some advanced chips in that country. He made a similar deal with Nvidia's smaller rival AMD. He also told reporters he was open to allowing Nvidia to sell a scaled-down version of its current flagship Blackwell chips to China. Months earlier, his own administration had banned the sale of H20 chips to China, reversing the decision in July as part of what the government said were negotiations on rare earths. The latest move drew condemnation from U.S. lawmakers in both parties who warned that it risked creating a pay-for-play framework for the sale of sensitive technologies to U.S. adversaries, a concern echoed by analysts and legal experts. 'Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities,' said U.S. Representative John Moolenaar, a Michigan Republican who chairs the House Select Committee on China. Representative Raja Krishnamoorthi of Illinois, the ranking Democrat on the same committee, said that 'by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee.' To be sure, the Trump administration has said the national security risks of resuming H20 sales are minimal because the chip was sold widely in China. U.S. Commerce Secretary Howard Lutnick last month described the H20 as Nvidia's 'fourth-best chip' in an interview with CNBC. He said it was in U.S. interests for Chinese firms to keep using American technology. Legal? But the deal is extremely rare for the U.S. and marks Trump's latest intervention in corporate decision-making, after pressuring executives to invest in American manufacturing and demanding the resignation of Intel's CEO, Lip-Bu Tan, over his ties to Chinese companies. It is unclear whether Trump's move is legal. The U.S. Constitution prohibits Congress from levying taxes and duties on articles exported from any state. Trade lawyer Jeremy Iloulian said it is hard to tell if this would be considered an 'export tax' or some other form of payment without knowing more about the agreement. 'Up until today, there has never been a consideration of how much companies need to pay to receive an export license,' Iloulian said. Added Kyle Handley, a professor at the University of California San Diego School of Global Policy and Strategy: 'It sure looks like an export tax to me ... they can call it whatever they want. It really looks a lot like the government is skimming a little bit off the top.' When asked if Nvidia had agreed to pay 15 per cent of revenue to the U.S., a company spokesperson said, 'We follow rules the U.S. government sets for our participation in worldwide markets.' 'While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,' the spokesperson added. A spokesperson for AMD said the U.S. approved its applications to export some AI processors to China but did not directly address the revenue-sharing agreement and said the company's business adheres to all U.S. export controls. 'I think it's fair to say that everything now in this administration seems negotiable in ways that were not the case before,' said Sarah Kreps, a professor at the Brooks School of Public Policy at Cornell University. 'I don't think this is unique in that this will be the last kind of deal like this that we see.' 'Slippery slope' Equities analysts said the levy could hit margins at chipmakers and set a precedent for Washington to tax critical U.S. exports. 'It feels like a slippery slope to us,' said Bernstein analysts, who expect the deal to cut gross margins on the China-bound processors by five to 15 percentage points, shaving about a point from Nvidia and AMD's overall margins. 'Naturally, not only chipmakers but also companies selling other strategic products to China will wonder if the remittance model could apply to their industries,' said Hendi Susanto, a portfolio manager at Gabelli, which holds shares in Nvidia. 'For sellers of strategic products to China, remittance could be a burden - or a lifeline to preserve market access to huge and growing opportunities in China,' Susanto said. (Reporting by Karen Freifeld in New York, Arsheeya Bajwa in Bengaluru and Alexandra Alper in Washington; Additional reporting by Dietrich Knauth in New York; Writing by Stephen Nellis in San Francisco; Editing by Sayantani Ghosh and Matthew Lewis)
Daily Mail
13 hours ago
- Business
- Daily Mail
Trump administration secretly embeds trackers in AI shipments to China to catch smugglers in tech war crackdown
The Trump administration is cracking down on illegal AI chip shipments to China by placing tracking devices inside the packages. U.S. authorities are tracing AI chips that are being diverted from their destinations by smugglers and sold to countries with export restrictions, according to a report from Reuters. Even after President Donald Trump loosened regulation on Chinese access to American semiconductors, the trackers are still being used by the administration to build a case against individuals, as well as companies earning profits by violating US trade restrictions. Sources told Reuters the trackers are placed in shipments of servers from large U.S. chip makers, including Nvidia and AMD. Moreover, server manufacturers such as Dell and Super Micro are equipped with US trackers. The tracking devices are reportedly placed in the packaging of the server shipments. A variety of US agencies are involved in the effort, including the Bureau of Industry and Security, Homeland Security Investigations, and the Federal Bureau of Investigation. The report was unable to determine when the trackers are installed on the chips during the shipping process. However, in one case, trackers were placed inside the packaging of a shipment of Dell servers with Nvidia chips. Authorities even found a way to hide the trackers within the servers themselves, Reuters reported. For decades, law enforcement has used location tracking devices to combat semiconductor smugglers seeking to evade US trade restrictions. In 2022, the U.S. began barring the sale of AI chips manufactured by Nvidia and AMD to China. Chip smugglers have, in some cases, discovered the tracking devices and removed them from Dell and Super Micro servers. Reports state the largest trackers were approximately the size of a cell phone. Following the report, Dell released a statement claiming the company is 'not aware of a U.S. Government initiative to place trackers in its product shipments.' Meanwhile, Super Micro told Reuters it will not discuss its 'security practices and policies in place to protect our worldwide operations, partners, and customers.' The U.S. has sought to control the flow of AI chip exports in recent years to curb China's technological advancement of its military. Restrictions were also placed on Russia following the invasion of Ukraine. In the past, congressional lawmakers have urged U.S. chip makers to install location verification technology on their products to help combat smugglers. Despite these restrictions, Trump on Monday made a deal with Nvidia and AMD to ship certain AI chip products to China. The companies agreed to pay the US government 15 percent of their revenue from sales of AI chips. The White House indicated on Tuesday that future deals could be on the table for other chip makers.
Yahoo
17 hours ago
- Business
- Yahoo
Exclusive-US embeds trackers in AI chip shipments to catch diversions to China, sources say
By Fanny Potkin, Karen Freifeld and Jun Yuan Yong SINGAPORE/NEW YORK (Reuters) -U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic. The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said. They show the lengths to which the U.S. has gone to enforce its chip export restrictions on China, even as the Trump administration has sought to relax some curbs on Chinese access to advanced American semiconductors. The trackers can help build cases against people and companies who profit from violating U.S. export controls, said the people who declined to be named because of the sensitivity of the issue. Location trackers are a decades-old investigative tool used by U.S. law enforcement agencies to track products subject to export restrictions, such as airplane parts. They have been used to combat the illegal diversion of semiconductors in recent years, one source said. Five other people actively involved in the AI server supply chain say they are aware of the use of the trackers in shipments of servers from manufacturers such as Dell and Super Micro, which include chips from Nvidia and AMD. Those people said the trackers are typically hidden in the packaging of the server shipments. They did not know which parties were involved in installing them and where along the shipping route they were put in. Reuters was not able to determine how often the trackers have been used in chip related investigations or when U.S. authorities started using them to investigate chip smuggling. The U.S. started restricting the sale of advanced chips by Nvidia, AMD and other manufacturers to China in 2022. In one 2024 case described by two of the people involved in the server supply chain, a shipment of Dell servers with Nvidia chips included both large trackers on the shipping boxes and smaller, more discreet devices hidden inside the packaging — and even within the servers themselves. A third person said they had seen images and videos of trackers being removed by other chip resellers from Dell and Super Micro servers. The person said some of the larger trackers were roughly the size of a smartphone. The U.S. Department of Commerce's Bureau of Industry and Security, which oversees export controls and enforcement, is typically involved, and Homeland Security Investigations and the Federal Bureau of Investigation, may take part too, said the sources. The HSI and FBI both declined to comment. The Commerce Department did not respond to requests for comment. The Chinese foreign ministry did not have immediate comment. Super Micro said in a statement that it does not disclose its 'security practices and policies in place to protect our worldwide operations, partners, and customers.' It declined to comment on any tracking actions by U.S. authorities. Dell said it is 'not aware of a U.S. Government initiative to place trackers in its product shipments.' Nvidia declined to comment, while AMD did not answer a request for comment. CHIP RESTRICTIONS The United States, which dominates the global AI chip supply chain, has sought to limit exports of chips and other technology to China in recent years to restrain its military modernization. It has also put restrictions on the sale of chips to Russia to undercut war efforts against Ukraine. The White House and both houses of Congress have proposed requiring U.S. chip firms to include location verification technology with their chips to prevent them from being diverted to countries where U.S. export regulations restrict sales. China has slammed the U.S. exports curbs as part of a campaign to suppress its rise and criticized the location tracking proposal. Last month, the country's powerful cyberspace regulator summoned Nvidia to a meeting to express its concerns over the risks of its chips containing "backdoors" that would allow remote access or control, which the company has strongly denied. In January, Reuters reported the U.S. had traced organized AI chip smuggling to China via countries such as Malaysia, Singapore, and the UAE — but it is unclear if tracking devices were involved. The use of trackers by U.S. law enforcement goes back decades. In 1985, Hughes Aircraft shipped equipment subject to U.S. export controls, according to a court decision reviewed by Reuters. Executing a search warrant, the U.S. Customs Service intercepted the crate at a Houston airport and installed a tracking device, the decision noted. U.S. export enforcement agents sometimes install trackers after getting administrative approval. Other times they get a judge to issue a warrant authorizing use of the device, one source said. With a warrant, it is easier to use the information as evidence in a criminal case. A company may be told about the tracker, if they are not a subject of the investigation, and may consent to the government's installation of the trackers, the source added. But the devices can also be installed without their knowledge. People involved in diverting export-controlled chip and server shipments to China said they were aware of the devices. Two of the supply chain sources, who are China-based resellers of export-controlled chips, said they regularly took care to inspect diverted shipments of AI chip servers for the trackers due to the risks of the devices being embedded. An affidavit filed with a U.S Department of Justice complaint regarding the arrests of two Chinese nationals charged with illegally shipping tens of millions of dollars' worth of AI chips to China earlier this month describes one co-conspirator instructing another to check for trackers on Quanta H200 servers, which contain Nvidia chips. It said the English language text was sent by a co-conspirator, whose name was redacted, to one of the defendants, Yang Shiwei. 'Pay attention to see if there is a tracker on it, you must look for it carefully," said the person, who went on to call the Trump administration by an obscenity. "Who knows what they will do."
