You're thinking of a hardware security module (HSM). These are standard for e.g. certificate authorities. To the best of my knowledge, they have never been used

You're thinking of a hardware security module (HSM). These are standard for e.g. certificate authorities. To the best of my knowledge, they have never been used by bitcoin outfits, but that is certainly possible, in principle. Of course, sane people don't mix HSMs and VMs.