Huawei is directing customers to independently procure memory for its upcoming AI chips, effectively outsourcing procurement to the black market due to severe U.S. sanctions and domestic supply shortages. The company plans to launch the Ascend 960DT chip early next year, aiming to double the performance of its current hardware. However, Chinese suppliers cannot produce enough High-Bandwidth Memory to meet demand, and strict U.S. export rules block direct purchases from dominant global manufacturers like Samsung and SK Hynix.
To bypass these restrictions, a sophisticated smuggling network has emerged. Smugglers bundle HBM with low-end server processors that fall beneath U.S. export performance thresholds, shipping the packages into China through Hong Kong. Once the shipments arrive, local workshops carefully separate the memory chips from the processors, despite high error rates and fragile procedures. This constrained supply chain has caused black market prices for HBM3E memory units to surge to around $4,000 each over the past year.
The illicit ecosystem is further sustained by stripped older Nvidia GPUs and excess inventory from canceled chip design projects. Consequently, South Korea's customs authority uncovered illegal chip exports worth $560 million by May, already surpassing past full-year records with one-third involving unauthorized strategic goods. This workaround highlights the persistent resilience of grey-market supply chains in evading international semiconductor trade controls.