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Crafting ingredient. Occasionally found in chests and toolboxes.
— In-Game Description

Rotating Gizmo is a crafting item. It's used for crafting weapons. It can be found in chests and toolboxes in the biome "The Suburbs". It can, of course, also be dropped by destroying encampments.

Usual locations for chests containing Rotating Gizmos (info from a comment on this Reddit post): Under the roofs of houses, basements, parking garage roofs, and fire department basements are good for chests containing said item.

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