AI Chip Smugglers Exploit Export Control Loophole to Bring Banned HBM from South Korea into China; Black Market Price Surges to $4,000 Per Unit

According to Tom's Hardware, citing The Information, AI chip smugglers are exploiting a technical loophole in U.S. and South Korean export controls to bring High Bandwidth Memory (HBM) chips from Samsung and SK hynix—originally banned for export to China—into the country. The core mechanism involves "packaging": smugglers own chip design firms that produce cheap, low-performance server processors not subject to sanctions. Because export control rules primarily assess the overall computing capability of the server processor rather than individually auditing attached storage components, these expensive HBM chips slip through as part of legal exports.

Once these combined chips arrive in Hong Kong and enter Shenzhen, technicians in workshops heat the boards to soften solder, carefully separating the crucial HBM memory stacks and discarding the remaining processor components. Despite a high failure rate in this disassembly process, the profit margins make it highly lucrative. A Shenzhen-based chip broker revealed that a year ago, a single HBM3E unit traded in China for several hundred dollars, but today the price has surged to approximately $4,000. Given that an AI GPU typically requires six to eight high-end memory chips, this implies a memory cost of $24,000 to $32,000 per GPU.

This illicit supply channel is critical for China's AI industry, particularly for companies like Huawei. Unable to purchase HBM directly from Samsung and SK hynix, and with domestic manufacturer CXMT's capacity and yield insufficient to fully meet demand, Huawei has reportedly told some customers to source the required HBM themselves. This further drives up black market demand and prices. However, as such operations become more common, smugglers fear imminent crackdowns by U.S. and South Korean authorities. Previous arrests include Super Micro executives and a California tech company CEO, while Taiwan and Malaysia have also ramped up anti-smuggling activities.