NuAxiSemiconductor trade intelligence

AI chip smugglers exploit trade control loophole to bring banned HBM from South Korea into China — expensive memory chips packaged with cheap, unsanctioned processors to become legal exports

What happened

According to The Information (reported by Tom's Hardware on 3 November 2026), a memory smuggler detailed how he gets export-controlled HBM chips from South Korea into China using a loophole: his chip design firm builds cheap, low-performing processors that fall under U.S. and South Korea's export controls, which are then paired with expensive HBM from Samsung and SK hynix that, on their own, are banned for export to China; because export control rules only look at the performance of the server processor and not the other components attached to it, the HBM chips slip into China. The boards land in Hong Kong and are smuggled across the border into Shenzhen in commuters' luggage, where technicians heat the boards to lift the memory chips; despite a high failure rate, the high price of HBM makes the procedure lucrative. A Shenzhen-based chip broker said a single HBM3E unit changed hands in China for several hundred dollars a year ago, and today it is about $4,000; with an AI chip requiring six to eight high-end memory chips, the broker makes $24,000 to $32,000 per AI GPU. Background: CXMT has begun risk production of HBM3E and is expected to mass produce by the end of this year but reportedly suffers from low yield; Huawei's Ascend 950DT sells for about $37,000 and delivers half the performance of the previous-generation H100; Huawei has reportedly said its 960DT would deliver performance similar to the H100, but since it cannot purchase HBM from Samsung and SK hynix, it told customers to find the HBM these servers need themselves. The smuggler fears South Korean and U.S. authorities will clamp down on such operations soon.