In a dramatic escalation of the ongoing tech and trade war, Chinese state media has leveled a serious accusation against the United States, branding it a “surveillance empire” for allegedly using location trackers in advanced chip shipments. This claim follows a recent Reuters report revealing that U.S. authorities have secretly placed tracking devices in specific consignments of advanced semiconductors to prevent their illegal diversion to China. The allegations mark a new and explosive chapter in the bitter competition for technological dominance between the world’s two largest economies.
The Chinese state-run news agency Xinhua published a fiery commentary titled “America turns chip trade into a surveillance game,” which accuses the United States of having a “surveillance instinct” and operating “the world’s most sprawling intelligence apparatus.” The article asserts that if American chips are seen as “Trojan horses for surveillance,” customers will be forced to seek alternatives. This strong language is a direct response to a practice that Beijing views as a profound violation of its national security and a subversion of international trade norms.
Heart of the Matter: Chips and Espionage
The recent allegations are a direct consequence of the U.S. export controls on advanced chips and related technologies to China. Since 2022, Washington has tightened restrictions on the sale of high-performance semiconductors, particularly those essential for developing artificial intelligence and supercomputers, citing national security concerns. The U.S. government fears that these technologies could be used to advance China’s military modernization efforts.
In response to these restrictions, a black market for these highly sought-after chips has emerged. The Reuters report, cited by Xinhua, describes how U.S. law enforcement agencies, including the Department of Commerce’s Bureau of Industry and Security, Homeland Security Investigations, and the FBI, have been using location trackers to monitor targeted shipments. The report notes that these devices, sometimes hidden inside the packaging or even the servers themselves, are a decades-old investigative tool used by U.S. law enforcement to combat the illegal diversion of restricted products. The U.S. has not officially commented on the specifics of the tracking operation, but officials have stated that the practice is part of a broader effort to enforce export curbs.
The use of these trackers is not a new concept, but their alleged application in the semiconductor trade has ignited a public relations firestorm. China views this as a blatant violation of trust and an act of espionage disguised as export enforcement. The accusation is particularly poignant given the long-standing claims from the U.S. and its allies that certain Chinese products, such as telecommunications equipment and vehicles, could be used for surveillance purposes. This new development creates a tit-for-tat dynamic, with both sides now publicly accusing the other of using technology for covert intelligence gathering.
Global Game of Distrust
The Chinese state media’s strong reaction reflects a broader strategy to challenge U.S. technological and economic dominance. By labeling the U.S. a “surveillance empire,” Beijing is tapping into a global narrative of distrust in American technology. The article’s warning that customers will seek alternatives to “Trojan horse” chips is a clear signal to the world that dependence on U.S. semiconductors comes with a perceived security risk. This could serve as a powerful tool to accelerate China’s push for self-reliance in its domestic chip industry.
This move comes at a time when Chinese authorities are already urging domestic companies to reduce their reliance on foreign chips. Recently, China’s cyberspace watchdog asked U.S. chipmaker Nvidia to explain whether its less-advanced H20 chips had any security risks, a claim Nvidia has vehemently denied. This dual approach of public criticism and internal pressure is aimed at shifting the country’s technological ecosystem away from U.S. suppliers and towards homegrown alternatives.
The global semiconductor industry is caught in the middle of this escalating geopolitical feud. Companies like Nvidia, Dell, and AMD, which are crucial to the global AI and tech supply chain, are now operating in a climate of heightened suspicion and political risk. Dell, for its part, has stated it was “not aware of a US Government initiative to place trackers in its product shipments.” This highlights the clandestine nature of the operation and the difficult position it places companies in.
Broader Implications
The “chip row” is more than a simple trade dispute; it’s a proxy war for future technological leadership. It also has a significant impact on international trade and the global supply chain. If distrust in U.S. products spreads, it could lead to a fragmentation of the global tech market, creating separate ecosystems based on national allegiance rather than technical merit. This would result in significant inefficiencies and higher costs for businesses worldwide.
The U.S. position is that these measures are necessary to protect national security and prevent the diversion of critical technology to adversaries. From this perspective, the use of trackers is a targeted and proportional response to the illegal smuggling of goods under export restrictions. However, China’s counter-narrative frames the issue as an act of American technological hegemony and surveillance, a narrative that resonates with many countries that are wary of U.S. dominance.
The coming weeks will be crucial as both sides continue to maneuver. The U.S. is likely to continue its enforcement efforts, while China will amplify its public criticism and accelerate its push for domestic chip independence. This “chip row” is a stark reminder that in the modern world, technology is a tool of power, and the fight for its control is far from over.
