The Information investigates the smuggling chain of high-end HBM in South Korea

The Information investigated the smuggling chain of high-end storage chips in South Korea and interviewed a dealer in Shenzhen in his 20s. He originally worked at a chip company and transitioned to the chip black market business by leveraging his network. Having been in the industry for only three years, he is now dressed in luxury brands and busy connecting buyers and sellers every day. The United States will begin to restrict exports of advanced high-bandwidth memory (HBM) to China starting at the end of 2024, but the rules have loopholes: HBM exports are restricted when sold separately, but if packaged together with processors, it may be judged based on the processing power of the processor to determine if it crosses the regulatory line.

A smuggler in his 40s controls a chip design company that specializes in designing cheap and lower-performance server processors. These chips are rarely purchased but are used as a pretext for procuring high-end HBM from South Korea. Packaging factories place HBM from Samsung and SK Hynix on the same substrate as these processors and declare exports under the category of low-performance processors. After the goods enter mainland China via Hong Kong, workshops reheat and remove the HBM, while the cheap processors are discarded, and any mishandling during disassembly could damage the memory.

A stack of HBM3E in the Chinese black market was priced at only a few hundred dollars a year ago, but it has now risen to about 4,000 dollars. An AI chip typically requires 6 to 8 stacks, costing between 24,000 to 32,000 dollars just for the memory. Some of the memory ultimately flows to Huawei customers. Huawei's next-generation Ascend 960DT is scheduled to launch in the first quarter of 2027, but there is a shortage of domestic HBM supply, and Huawei has asked some customers to procure memory on their own. With the increase in imitators, the aforementioned smuggler responsible for procuring chips from South Korea plans to sell his controlling stake in the company next year, fearing that the spread of the route will attract strict scrutiny from regulatory authorities in South Korea and the United States.