Amazon is turning to the startup world to find a potential fix for one of its thorniest logistics problems.

Retailers of all sizes have in recent years struggled with an uptick in fraudulent returns. The scam involves shoppers requesting a refund, but instead of returning the merchandise, they keep the item and send back an empty package or a box of unrelated junk.

It’s become a costly nuisance for retailers, accounting for $103 billion in losses last year, according to Appriss Retail.

Cambridge Terahertz, a Sunnyvale, California-based startup, has developed a 3D imaging system that can see inside unopened packages, enabling retailers to more easily and quickly spot cases of return fraud.

The company has just closed a $12 million seed financing, led by venture firm Felicis, with participation from Amazon’s $1 billion Industrial Innovation Fund and other investors.

“Amazon handles a lot of boxes, as you can imagine,” Nathan Monroe, CEO of Cambridge Terahertz, said in an interview. “It’s a big problem just knowing what’s inside boxes, knowing how efficiently they’re packed, knowing if what you’ve returned to them is what you said it is.”

Amazon launched the Industrial Innovation Fund in 2022 with a goal of investing in businesses working on technology solutions that could apply to the company’s massive and complex operations network, from the middle mile to the last-mile portion of the delivery process.

Franziska Bossart, head of the fund, said in an interview that Amazon will typically plan to pursue a deeper “commercial relationship” with portfolio companies over time, ranging from piloting the technology to a potential acquisition.

Cambridge’s technology “aligns well with Amazon’s needs” and can have a real impact on its ability to screen inventory for damages and defects once it’s returned or before a package leaves the warehouse.

“The ability to see into boxes, identify contents, along with the compact nature of the system could allow for integration at various points in our operations,” Bossart said.

The fund has backed 20 companies so far. It also sourced Amazon’s acquihire and licensing deal with artificial intelligence robotics startup Covariant last August, Bossart added.

Amazon’s investment track record has come under scrutiny in the past. A 2020 investigation from The Wall Street Journal found the company’s Alexa Fund, which primarily invests in voice and AI technologies, used privileged information gained during meetings to launch its own competing products, citing people and startups familiar with the situation. Amazon previously denied any wrongdoing.

One of the Alexa Fund’s most notable investments was in video doorbell maker Ring, which Amazon later acquired in 2018 for $1 billion.

Cambridge connected with Amazon last year through a pitch competition focused on packaging visibility. Monroe co-founded the company in 2023 after researching terahertz imaging at the Massachusetts Institute of Technology.

The company, which has 10 employees, says it shrunk airport-scale security scanners down to a chip-based system inside a pyramid-shaped device that can fit in your hand. The device was originally conceived as a way to detect concealed weapons by seeing through nonconducive materials, like clothing or packages, in an unobtrusive way.

Cambridge said it has since been approached by companies interested in how the technology can be used in supply chains, manufacturing, aerospace and medical applications.

The startup said it has secured four government contracts, and has had discussions with U.S. Customs and Border Protection around how the technology can be used to detect shipments of fentanyl at the border, a problem the Trump administration has zeroed in on through its crackdown on a near century-old trade loophole known as de minimis.

The capital from Amazon and others will enable Cambridge to ramp up hiring and “fully productize” its 3D imaging technology, Monroe said.

WATCH: Amazon weighs another multi-billion dollar investment in Anthropic

Nvidia said Thursday that datacenters built with smuggled chips are a “losing proposition” and that it does not support unauthorized products.

The statement came in response to a Financial Times report that at least $1 billion worth of its artificial intelligence chips illegally entered China.

“Trying to cobble together datacenters from smuggled products is a losing proposition, both technically and economically,” a spokesperson said in a statement to CNBC. “Datacenters require service and support, which we provide only to authorized NVIDIA products.”

According to the FT report, at least $1 billion worth of the company’s chips entered China as President Donald Trump rolled out restrictions on shipments of the company’s H20 chips to the world’s second-largest economy.

Nvidia’s B200 chips, which are prohibited from being sold to China, have become popular on the black market despite restrictions, the Financial Times reported, citing sales contracts, company filings and people familiar with the deals.

Chinese distributors began selling the chips in May to data center suppliers whose customers include Chinese AI groups, the report said.

For years, the U.S. and China have competed to lead the artificial intelligence race. China serves as a major market for chipmakers, but the U.S. has restricted many advanced processor sales there due to national security concerns.

Last week, Nvidia CEO Jensen Huang said it would soon resume selling its H20 chips to China after a breakthrough with the Trump administration on regulations.

The U.S. government had effectively blocked sales to China in April when it told the company it would require a license. The chip was created to work around previous export controls on China.

Nvidia CEO Jensen Huang has said he wants to sell more advanced chips than the H20 to China.

WATCH: What Nvidia H20s mean for China’s AI ambitions

Commerce Secretary Howard Lutnick said Thursday that TikTok will go dark for Americans unless China agrees to give the U.S. more control over the popular short-form video app.

“We’ve made the decision. You can’t have Chinese control and have something on 100 million American phones,” Lutnick told CNBC’s “Squawk on the Street” on Thursday.

TikTok’s future in the U.S. has been uncertain since 2024, when Congress passed a bill that would ban the platform unless its Chinese owner, ByteDance, divested from it.

Lawmakers had grown concerned that the Chinese government could access sensitive data from American users or manipulate content on the platform.

Deal talks have dragged.

Last month, President Donald Trump extended the deadline for a third time since taking office in January. Now, ByteDance has until Sept. 17. to divest TikTok’s U.S. business.

“Basically, Americans will have control. Americans will own the technology. Americans will control the algorithm. That’s something Donald Trump is willing to do,” Lutnick said.

He added that if China doesn’t approve the deal, “then TikTok is going to go dark.”

It’s not clear where deal talks stand. Trump told Fox News in an interview late last month that he has a group of “very wealthy people” ready to buy the platform.

Earlier this month, the private equity firm Blackstone pulled out of a consortium bid for TikTok’s U.S. operations, according to a report from Reuters.

WATCH: Howard Lutnick on TikTok: App will go dark if China won’t agree to U.S. control