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Pot calls kettle black as China dubs US 'surveillance empire' over chip tracking. Spy vs spy in the chips. Comment Chinese state media called the US an aspiring "surveillance empire" over its proposed use of asset tracking tags to crack down on black-market GPU shipments to the Middle Kingdom. "While accusing others of spying, Washington runs the world's most sprawling intelligence apparatus. Steeped in Cold War paranoia, some American politicians see trade not as a channel for mutual exchange, but as another theater for covert operations," state-run outlet Xinhua wrote in a comment last week.  The US certainly has a long and storied history of high-tech intelligence gathering, but then again, so does China, which operates one of the largest surveillance camera networks on the planet. The terse words are the latest salvo in an ongoing battle over advanced technology shipments between the two global rivals. US export controls enacted over the past few presidential administrations have steadily cut off Chinese companies from America's most powerful chips and semiconductor manufacturing equipment necessary to build them. Since the start of the year, several US lawmakers have proposed legislation that would require American chipmakers to implement location verification functionality to ensure sensitive electronics like GPUs don't find their way into countries of concern, most notably China.  How this would even be accomplished, if ever approved by Congress, remains to be seen. However, last week Reuters reported that the US authorities had begun embedding location-tracking devices onto server shipments to see if they turned up anywhere they didn't belong.  We'll note that using asset tags to track high-value shipments, of which GPU servers from Nvidia and AMD almost certainly qualify, doesn't strike us as all that unusual. Yet, apparently the equivalent of taping an Apple AirTag to the inside of a server is a bridge too far for Chinese state media, which compared this tactic to the machines from the film The Matrix. "In the Hollywood blockbuster The Matrix, machines lulled humans into believing that they were free while secretly monitoring their every thought," the publication wrote. "Washington's blatant demand for embedding security controls in US AI chips is the real-world sequel: the facade is free trade, but surveillance is built in." The metaphor isn't perfect. Last we checked, Uncle Sam hasn't yet resorted to using human batteries to power major industry or AI development. (Ed: would we know if they were?) Perhaps something for the Department of Energy to look into. The Matrix would have also been a lot shorter if the machines had had a kill switch. We'll also point out the Chinese named their CCTV network Skynet, which also happens to be the name of the malicious AI from The Terminator bent on exterminating the human race. To that end, the bigger concern doesn't appear to be so much asset tracking but rather the potential that chips could be remotely disabled if US-China relations took a turn for the worse. Shortly after the Trump administration gave Nvidia and AMD the green light to resume shipments of their China-spec H20 and MI308 accelerators, government officials in Beijing raised alarm bells about the security risks of tracking tech, backdoors, and kill switches. Nvidia has vehemently denied any such plans. "Embedding backdoors and kill switches into chips would be a gift to hackers and hostile actors," Nvidia chief security officer David Reber Jr wrote in a recent blog post that argued such a mandate would "undermine global digital infrastructure and fracture trust in US technology." Not that long ago, the US was accusing Chinese telecommunications and IT giant Huawei of building backdoors into its equipment under Beijing's direction. Huawei denies the existence of any such backdoor, but that didn't stop the US from implementing a multi-billion-dollar rip-and-replace order and pressuring its allies to do the same. It seems the tables have now turned. Last week, Chinese government officials reportedly issued letters to Chinese companies discouraging the use of Nvidia's H20 accelerators for AI applications, particularly those involving government or national security related work. Though as we pointed out at the time, those letters may have had less to do with promoting domestic alternatives like Huawei's CloudMatrix rack systems, and more to do with convincing the US not to reinstate a sales ban or mandate kill switches.