Second, AI chip designers often don’t sell directly to end users
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◌ Single Source
Instead, the AI chip might pass through a server manufacturer, a distributor, and a reseller on its way to the end user.
Key facts
- One estimate suggests that—in 2024 and 2025 alone—over 450,000 advanced AI chips were smuggled into China; that’s one to two cutting-edge AI supercomputers’ worth of compute as of early 2026
- To estimate its true scale, they need to know how much is hidden below the waterline—and whether that’s 50% or 90% makes a big difference
- CSET’s Jacob Feldgoise, Kyle Miller, and Hanna Dohmen dove deep into investigating how location verification methods can—and cannot—improve enforcement of export controls on powerful AI chips
- CSET’s Jacob Feldgoise, Kyle Miller, and Hanna Dohmen dove deep into investigating how location verification methods can—and cannot—improve enforcement of export controls on these powerful chips
Summary
CSET’s Jacob Feldgoise, Kyle Miller, and Hanna Dohmen dove deep into investigating how location verification methods can—and cannot—improve enforcement of export controls on powerful AI chips, culminating in their report. But smugglers have repeatedly circumvented those controls, diverting hundreds of thousands of chips. Increasingly, U.S. policymakers see location verification methods, which help regulators determine where AI chips are physically located, as good options to detect potential smuggling and improve export control enforcement. Two aspects of the AI chip trade make smuggling easier.