Smugglers mount banned HBM chips on cheap processors to slip them past export controls into China
Because rules judge only the processor, memory worth about $4,000 a unit in China is moving through Hong Kong and Shenzhen, with enforcement expected to tighten.
A memory smuggler has described a route for moving export-controlled HBM chips from South Korea into China by mounting them on cheap, low-performance AI processors that fall outside the controls, since the rules only assess the processor's performance. The modules reportedly travel through Hong Kong and are carried across into Shenzhen by commuters, where workshops desolder the memory and discard the rest. The reported value of an HBM3E unit in China has risen from several hundred dollars to about $4,000, which would put the broker's take at $24,000 to $32,000 per AI GPU requiring six to eight such chips. The demand is driven by a memory bottleneck for Chinese AI labs, since Huawei cannot buy HBM from Samsung or SK hynix and domestic supply is short, and Huawei has reportedly told customers to source their own HBM. The smuggler expects South Korean and U.S. authorities to crack down soon, given recent arrests and tightening enforcement in Taiwan and Malaysia.
Why it matters
The episode shows that export controls aimed at the processor can be sidestepped by the memory attached to it, and that the gap is being filled by informal routes rather than authorised supply. For readers following the AI hardware race, it points to a memory shortage in China that domestic production has not yet closed, and to pressure on South Korean and U.S. authorities to close the loophole. The reported arrests and tighter checks in Taiwan and Malaysia suggest the route will be harder to use, though the scale of the trade remains unclear from the available facts.
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