Huawei tells customers to find their own AI chip memory, effectively outsourcing procurement to the black market
Huawei is telling customers to source the high-performance memory for its AI chips on their own, pushing them onto the black market. Smugglers are exploiting a loophole in U.S. export rules by bundling HBM with low-end processors, shipping them through Hong Kong, and separating the chips on site. Prices for smuggled HBM3E memory have surged to around $4,000 per unit in just one year. The article Huawei tells…
Huawei tells customers to find their own AI chip memory, effectively outsourcing procurement to the black market
Key Points
- Facing U.S. sanctions and supply shortages, Huawei is directing customers to procure memory for its new AI chips independently on the black market.
- Smugglers dodge U.S. rules by pairing HBM with low-end processors and routing them into China through Hong Kong.
- The shortage has driven black market prices for HBM units to around $4,000, while South Korea reports record levels of illegal chip exports.
Huawei can't get enough memory for its AI chips, pushing customers onto the black market. A sophisticated smuggling network has sprung up to fill the gap, exploiting a loophole in U.S. export rules.
Huawei is telling some customers to source the memory for its AI chips themselves, effectively pushing buyers onto the black market, The Information reports. The company plans to launch the Ascend 960DT early next year, which it says will double the performance of its current chips. But Huawei's Chinese suppliers can't produce enough High-Bandwidth Memory (HBM), and U.S. export rules block direct purchases from Samsung and SK Hynix. Together, those two companies control over 80 percent of the global market.
Smugglers have found a workaround. They bundle HBM with cheap server processors whose performance falls below the export threshold, then ship the packages to China through Hong Kong. Once there, workshops separate the memory chips from the processors. The process is fragile and the error rate is high, but the margins make it worth it.
Smuggled memory prices have surged to $4,000 per unit
Prices for smuggled HBM3E memory have jumped from a few hundred dollars to around $4,000 per unit in just one year, according to a broker in Shenzhen. Each AI chip needs six to eight units, meaning the memory alone can cost up to $32,000.
The black market doesn't run on smuggling alone. Older Nvidia GPUs stripped for parts and excess inventory from chip designers who scrapped projects or cut orders also feed the supply. South Korea's customs authority had uncovered trade violations worth $560 million by May, already surpassing the previous full-year record. A third of that total involved strategic goods like chips exported without proper authorization or with false declarations.
AI News Without the Hype – Curated by Humans
Subscribe to THE DECODER for ad-free reading, a weekly AI newsletter, our exclusive "AI Radar" frontier report six times a year, full archive access, and access to our comment section.
Subscribe now