How Smugglers Get Expensive Memory Chips to China from South Korea

Based on interviews with smugglers, Huawei customers and others familiar with its supply chain, The Information reports that smugglers exploit a loophole in US export rules: high-bandwidth memory (HBM) from Samsung and SK Hynix is packaged with deliberately mediocre server processors (so the package is classed by the weak processor), shipped via Hong Kong, then heated apart in Chinese workshops to recover the memory, which often reaches Huawei's customers. Huawei has told some clients its next flagship Ascend 960DT (due Q1 next year, being readied with DeepSeek for pre-training) will rely largely on Korean HBM because domestic suppliers (Fujian Jinhua, CXMT) can't make enough, and has asked some customers to source memory themselves; it raised the Ascend 950DT suggested price to over US$34.4K. A Shenzhen broker says an HBM3E unit now costs ~$4,000 versus several hundred dollars a year ago. Other supply comes from salvaged GPUs, orphaned inventory and hoarding distributors. Caveats: the precise extent of the smuggling isn't clear; SK Hynix and Samsung say they comply with export rules (SK Hynix says it hasn't supplied Huawei since 2020); Huawei and Fujian Jinhua didn't comment; the story was updated to correct a TSMC detail.