Nvidia Tests AI Chip Location Tracking to Stop China Smugglers

Nvidia's New Location Verification Technology for AI Chips

Nvidia has reportedly started privately testing a location verification technology for its artificial intelligence chips. This new feature is designed to prevent the smuggling of advanced chips into restricted countries, such as China. The technology is expected to be first implemented in Nvidia's latest Blackwell chips, which are set to include enhanced security features.

The location tracking feature works as optional software that data center operators can install on their systems. According to a Reuters report, the software measures the time delay in communications between the chips and Nvidia’s servers to estimate their location. This method is similar to how other internet services determine location.

In response to questions about the introduction of location tracking, Nvidia stated: “We’re in the process of implementing a new software service that empowers data center operators to monitor the health and inventory of their entire AI GPU fleet.” The company added that this customer-installed software agent leverages GPU telemetry to monitor fleet health, integrity, and inventory.

Impact on Smuggling Efforts

Over the past year, the U.S. Department of Justice (DOJ) has taken action against multiple smuggling networks connected to China. These networks have attempted to move advanced AI chips worth over $160 million to China. Authorities recently announced Operation Gatekeeper, which has led to the arrest of two Chinese nationals and the seizure of over $50 million in advanced Nvidia chips and cash.

Between October 2024 and May 2025, smugglers exported and attempted to export at least $160 million worth of Nvidia H100 and H200 chips to China. They used fake companies, falsified shipping documents, and routed the contraband through third countries to avoid detection. In November, federal prosecutors charged four individuals with smuggling around 400 Nvidia A100 processors to China between October 2024 and January 2025. Law enforcement also disrupted two additional shipments that would have included supercomputers with H100 GPUs and H200 chips. The defendants allegedly received over $3.8 million in wire transfers to fund their operations.

Concerns Over Backdoors

In July, China’s top cybersecurity regulator summoned Nvidia to inquire if its products contained backdoors that could allow the U.S. to bypass security features. The regulator cited claims from U.S. AI experts about mature remote control technologies. However, Nvidia has strongly denied any presence of backdoors in its chips. “Cybersecurity is critically important to us. Nvidia does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them,” the company stated.

Trump’s Policy on H200 Exports

President Donald Trump recently announced that he would allow Nvidia to export its H200 chips to approved customers in China, reversing the restrictions imposed during Biden’s tenure. Trump claimed that this policy would require a 25% cut to the U.S. and would apply to other chipmakers like AMD and Intel. He also stated that Chinese President Xi Jinping “responded positively” to the proposal.

The H200 is more advanced than the H20 chips previously allowed for export to China but less powerful than Nvidia’s cutting-edge Blackwell and Rubin chips. A group of senators has criticized Trump’s decision, calling it a “colossal economic and national security failure.” They argue that the H200 chips would provide Chinese AI firms with a meaningful performance boost. Think tank analysis suggests that the current U.S. advantage in AI computing power over China could shrink from ten times to five times if H200 exports are allowed.

China’s Response and Domestic Chip Production

HAWXTECH.NET reports that Beijing plans to limit access to H200 chips through an approval process. Chinese regulators have been working to reduce reliance on foreign AI chips and have banned Nvidia and other imported processors from being used in new state-funded data center projects. China is also accelerating its domestic chip production with plans to triple its AI chip output by 2026.

Conclusion

Nvidia’s new location verification technology represents a significant step in preventing the unauthorized movement of advanced AI chips. As the geopolitical landscape continues to evolve, the implications of such technological advancements will be closely watched by both governments and industry stakeholders.