Smugglers exploit $4,000 HBM loophole to feed Huawei's next AI chip
What's the deal? Traders are moving South Korean high-bandwidth memory (HBM) from Samsung ElectronicsDealroom has a profile for this one. Try Dealroom → and SK hynixDealroom has a profile for this one. Try Dealroom → into China by packaging the chips with low-end server processors, exploiting a gap in US export controls, The InformationDealroom has a profile for this one. Try Dealroom → reported. Because a package's computing capability is judged by the processor rather than the memory, the shipments fall below the restricted threshold and avoid curbs on standalone HBM.
How it works: Packaging firms bond the memory to cheap processors, declare the shipments under the processor's classification, and route them through Hong Kong into mainland China. There, technicians heat the packages to melt the solder, detach the memory stacks, and discard the processors — a delicate process with a high failure rate.
Why now? US controls on advanced HBM exports to China took effect in December 2024, but exempted HBM already integrated into logic chip products. The timing coincides with HuaweiDealroom has a profile for this one. Try Dealroom →'s preparation of its Ascend 960DT AI chip, due in the first quarter of 2027.
Follow the money: A Shenzhen broker quoted about $4,000 for one HBM3E unit, up from a few hundred dollars a year earlier. A finished AI chip needs six to eight units, putting memory alone at $24,000 to $32,000.
What's the endgame? People familiar with Huawei's supply chain said the company told some customers the Ascend 960DT will rely heavily on Samsung and SK hynix memory, and asked buyers to secure it themselves. The accounts do not establish that either manufacturer supplied Huawei directly; SK hynix said it has not supplied Huawei since US restrictions took effect in 2020.
What could go wrong? One smuggler sourcing chips from Korea said the chance of being caught has risen as more operators use the same routes. He plans to sell most of his company's equity next year, fearing tighter scrutiny from South Korean and US regulators. South Korea recorded US$645.8M in trade security violations through May 2026, exceeding the US$549.7M logged for all of 2025.
The signal: The route shows how product-classification and transshipment loopholes can blunt direct-sales controls. With HBM in tight global supply and Samsung and SK hynix holding more than 80% of the market, the pressure to close the gap — and the incentive to exploit it — is only climbing.
Read more: The Information, wccftech.com, tokenpost.com, trendforce.com, news.sbs.co.kr, chaincatcher.com, biz.chosun.com
