Elon Musk may have put the Pentagon at risk of espionage and sabotage by quietly purchasing 2,000 tons of Chinese-made transformers for xAI’s Colossus data center.
xAI’s Colossus, located in Memphis, Tennessee, is the world’s largest AI supercomputer and a prime target for hackers due to its ties to the U.S. government.
The facility was gifted a $200 million contract with the Department of Defense in July to “develop prototype frontier AI capabilities to address critical national security challenges… across warfighting and enterprise domains.” The Department of Homeland Security uses a custom version of Grok, X’s AI chatbot, which Colossus powers.
U.S. Customs Data reveals that Colossus has been importing its transformers from Shanghai for at least a year. OligarchWatch reported on the discovery on Tuesday.
Transformers convert high-voltage electricity into usable power for AI data centers. xAI CEO Elon Musk, 54, has called the need for transformers a “bottleneck“ that stifles the growth of AI companies. To bypass this, xAI has been buying Chinese-made transformers in bulk to gain a competitive edge.
The AI community has warned about the risks posed by Chinese-made transformers for years.
In 2021, the National Intelligence Council warned, “China is the world’s leading supplier of advanced grid components for ultrahigh-voltage systems, such as transformers, circuit breakers, and inverters, which we assess creates cyber vulnerability risks.”
Anthropic, one of xAI’s competitors, reported in July 2025 that Chinese products in the AI supply chain have “periodically” been found to have “backdoors.” A backdoor is a stealthy way for a hacker to gain access to data contained on a computer.
In April, AI security firm Gladstone AI reported that Chinese transformers “can be used as back-doors for sabotage operations.”
“If a superintelligence project were kick-started under nominal conditions, unsecured supply chains for AI hardware, as well as electrical and cooling infrastructure could embed physical CCP trojan horses deep into the data centers that house some of the most national security-critical technology America will ever build,” reads the report.
xAI responded to a request for comment by saying only, “Legacy Media Lies.”
xAI’s indifference to the security risks posed by Chinese transformers is consistent with the company’s lax cybersecurity protocols, long a target of criticism from AI experts.
In the Dec. 2024 Future of Life AI Safety Index, xAI scored an “F” rating in Risk Assessment, Safety Frameworks, Existential Safety Strategy, and Governance and Accountability.
For the survey, xAI safety adviser Dan Hendrycks responded “No” to questions asking, “Does your organization report AI incidents, adverse events and near-misses related to frontier AI models to the appropriate government(s)?” and “Does your organization share cyber threat intelligence information with the appropriate government(s) and other leading AI firms?”
Beating China in the AI race has been a focus of the Trump administration. The president has spent 2025 rescinding Biden-era restrictions on the technology and signing executive orders to promote AI growth, all aimed at beating China.
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