U.S.-China Chip Trade Tensions Escalate as China Calls U.S. a "Surveillance Empire"

The US has secretly placed location tracking devices in chip shipments to detect diversions to China, prompting China's state-run media to call the US a "surveillance empire." The move reflects the US's tightening restrictions on advanced chip exports to China, amidst concerns over potential security risks. The Chinese government has also cautioned domestic tech firms over the use of Nvidia H20 chips, citing backdoor security risks.

The United States has secretly placed location tracking devices in chip shipments to detect potential diversions to China, a practice that has been criticized by China's state-run media as reflecting the "instincts of a surveillance empire" [1]. This move is part of the U.S.'s ongoing efforts to tighten restrictions on advanced chip exports to China, driven by concerns over potential security risks.

China's state-run media outlet Xinhua published a commentary titled "America turns chip trade into a surveillance game," accusing the U.S. of running the "world's most sprawling intelligence apparatus" [1]. The U.S. government has in recent years imposed stricter controls on the export of advanced chips and related technologies to China, as the two superpowers compete for technological dominance.

The U.S. administration has also faced scrutiny over its handling of Nvidia's H20 chips, which were designed for the Chinese market after export restrictions were imposed in late 2023. The Trump administration initially banned the sales of these chips in April but reversed the ban in July [2]. However, China's cyberspace watchdog has raised concerns about potential backdoor security risks in the H20 chips [3].

In response to these concerns, Chinese authorities have urged domestic tech firms to exercise caution when using Nvidia's H20 chips, particularly for government and national security applications [4]. This cautious approach reflects China's commitment to supporting its domestic AI chip industry and maintaining technological self-reliance.

The controversy surrounding the U.S.'s tracking devices and the H20 chip exports highlights the complex geopolitical and technological landscape of the AI chip industry. While the U.S. aims to maintain its technological edge, there are concerns that overly restrictive policies might inadvertently accelerate China's push for technological self-sufficiency [2].

References:
[1] https://www.reuters.com/world/china/chinese-state-media-calls-us-surveillance-empire-over-trackers-chip-shipments-2025-08-15/
[2] https://theoutpost.ai/news-story/nvidia-s-h20-chip-export-to-china-a-complex-geopolitical-and-technological-dilemma-19131/
[3] https://www.cnbc.com/2025/08/10/chinese-state-media-says-nvidia-h20-chips-not-safe-for-china.html
[4] https://www.ainvest.com/news/nvidia-faces-china-pressure-reports-h20-avoidance-2508/