US tracking device claims under lens

The US government's reported practice of secretly placing location tracking devices in targeted shipments of advanced chips showcases that it is using all kinds of tactics to implement its export control measures, experts said.

Such moves severely disrupt normal business cooperation and undermine trust in US technologies and products, they added.

The comments came after Reuters quoted anonymous sources as saying that US authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of unauthorized diversion to China.

Xiang Ligang, director-general of the Zhongguancun Modern Information Consumer Application Industry Technology Alliance, a telecom industry association, said such behavior only fuels Chinese companies' distrust toward US companies such as Nvidia.

Reuters reported that five people actively involved in the AI server supply chain claim they are aware of the use of the trackers in shipments of servers from manufacturers such as Dell and Supermicro, which include chips from Nvidia and AMD.

Xiang said users, not only companies in China, but also clients across the world, may abandon US products over fears of potential risks.

In addition, in late July, the Cyberspace Administration of China summoned Nvidia over alleged security risks concerning its H20 AI chips sold to China.

"The demand for H20 chips was lower than expected, according to the latest feedback of our customers," said a regional manager of a major Chinese information technology distributor, on condition of anonymity.

The manager said that for chips like the H20, demand depends heavily on large corporations, which are reluctant to buy the products from Nvidia.

An engineer at a Chinese internet company, also on condition of anonymity, said: "Cybersecurity is of crucial importance to us. We cannot tolerate any potential risks. Even if H20 chips are available now, we are not that eager to buy."

Last year, the Cyber Security Association of China urged a comprehensive review of products from US tech company Intel, citing recurring cybersecurity vulnerabilities and high failure rates, so as to safeguard the country's national security and protect the rights of Chinese consumers.

On July 26, 2023, the Wuhan Municipal Emergency Management Bureau published a statement that 360 Security Group detected a cyberattack from overseas organizations on its earthquake monitoring center. Some front-end station collection points of seismic reporting data had been implanted with back-door programs.

Lu Chuanying, a professor at the School of Political Science and International Relations at Tongji University, said: "Digital space is a virtual domain where information travels at light speed, defying the conventional boundaries of time and space that govern human society. In doing so, it neutralizes the role of geography in shaping the digital geopolitical landscape.

"China-US relations in the digital sphere have undergone a profound transformation over the years — evolving from initial technological collaboration to strategic decoupling, and escalating from random disputes to systemic geopolitical maneuvering."

The Financial Times reported on Monday that Nvidia has agreed to pay the US government 15 percent of its revenue from H20 chip sales in China as part of a deal to secure export licenses to Beijing.

In response to the report, Nvidia said in a statement to China Daily, "We follow rules the US government sets for our participation in worldwide markets."

Charlie Dai, vice-president and principal analyst at market research company Forrester, said the 15 percent fee agreement starkly underscores how trade tensions drive up market access costs.