Huawei asks customers to source AI chip memory themselves, pushing procurement to the black market
The Information reports that Huawei, facing insufficient HBM production capacity from Chinese suppliers and barred by U.S. export rules from buying directly from Samsung and SK Hynix, has told some customers to source the memory needed for its AI chips themselves. Smugglers bundle HBM with cheap server processors that fall below the export threshold, ship them into China via Hong Kong, and then disassemble them; the process is fragile and error-prone. A broker in Shenzhen said the unit price of smuggled HBM3E has risen from several hundred dollars to about $4,000 within a year, each AI chip requires six to eight units, and memory costs alone can reach as much as $32,000. Huawei plans to launch the Ascend 960DT early next year, claiming performance will double.
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The original report discloses that Huawei has told customers to source HBM supply themselves, and details the smuggling chain and price changes, offering a window into the supply chain gap under export controls.
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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.