Remember the good ol’ days when the technological flashpoint for a Cold War was who could make it to the moon first? Well these days, in the simmering Cold War between the U.S and China, the battle for tech supremacy requires less Tang and rocket fuel and more high-end semiconductors. I’m talking of course about artificial intelligence.

To win the AI arms race, the Trump administration is exploring requiring location trackers on high-end AI chips all to prevent those very expensive, very powerful Nvidia chips from being smuggled into China. Would that work?

Nvidia may be the company that designs those high-end AI chips the U.S. says are too powerful to sell to China, but they’re typically not the company that assembles them into an AI server and then sells those servers to, say, a Malaysian AI startup.

“You might have server companies selling to someone who they think is a legitimate buyer, who is actually located in China. And so then the server ends up in Hong Kong or in Shenzhen,” said Jacob Feldgoise, senior data research analyst at Georgetown’s Center for Security and Emerging Technology.

No one knows for sure how prevalent AI chip smuggling is. The Financial Times reported last month at least $1 billion worth of banned Nvidia chips were circulating on China’s black market.

Feldgoise said having Nvidia build location trackers into the chips themselves or the software they operate on could be an effective deterrent.

“It may make smugglers less likely to want to go down this route,” he said.

Nvidia declined an interview request. The company has downplayed smuggling, saying that trying to build big data centers on stolen chips is just not technically or economically feasible.

University of California, Los Angeles, engineering and law professor John Villasenor said if the goal is to preserve American AI supremacy, requiring location tracking could backfire.

“The fact of having location tracking means there's sort of a level of surveillance that I think many potential purchasers of these chips would be — rightly — uncomfortable with,” he said.

The location tracking proposal is part of a broader debate of whether AI export controls are really effective in the first place.

“And so to the extent that people, folks, for example, in China, have a harder time getting strong good AI solutions from the U.S., that increases the incentives to really invest locally,” Villasenor said.

Or create new innovations, like the Chinese AI model DeepSeek, which requires less powerful AI chips in the first place.