Prices for smuggled HBM3E memory have climbed from a few hundred dollars to approximately $4,000 per unit over the span of a single year. Facing stringent U.S. export controls and domestic supply constraints, Huawei is requiring its customers to independently procure memory for its upcoming AI chips through secondary channels, according to The Information.
The company plans to release the Ascend 960DT early next year, stating that the accelerator will double the performance of its existing hardware. Domestic Chinese suppliers remain unable to manufacture sufficient High-Bandwidth Memory to support this roadmap, while U.S. regulations prohibit direct acquisitions from Samsung and SK Hynix. Together, Samsung and SK Hynix control more than 80 percent of the global High-Bandwidth Memory market.
Smuggling Networks and Fragmented Supply
How do these restricted memory modules reach Chinese workshops despite export controls?
Smugglers bypass U.S. restrictions by pairing High-Bandwidth Memory with low-end server processors that fall beneath the regulatory threshold, routing the cargo into China through Hong Kong. Upon arrival, local workshops disassemble the shipments to separate the memory chips from the processors.
Workshops in China face high error rates when extracting smuggled memory chips from low-end processor bundles.
Although the extraction process is technically fragile and yields a high error rate, illicit profit margins continue to incentivize the operational risk. The black market also draws volume from older Nvidia GPUs stripped for components, alongside excess inventory dumped by chip designers who have abandoned projects or scaled back orders.
Escalating Unit Economics and Enforcement
This procurement model shifts substantial financial risk directly onto end customers. Because each AI accelerator requires six to eight memory units, the cost of High-Bandwidth Memory alone reaches up to $32,000 per chip.
Each AI chip needs six to eight memory units, driving standalone component costs up to $32,000.
Enforcement data highlights the expanding scale of these grey market channels. South Korea's customs authority intercepted trade violations totaling $560 million by May, exceeding its prior full-year record. One-third of that volume involved strategic goods such as semiconductor chips exported without authorization or moved through fraudulent declarations.
Review existing compute procurement agreements and audit hardware bills of materials to ensure your server deployments rely on verified component supply lines rather than secondary grey-market channels.
Why it matters
Who actually pays the price for China’s push into advanced silicon? By demanding that clients secure their own smuggled memory, Huawei turns buying the Ascend 960DT into an expensive gamble where customers shoulder both inflated secondary prices and the risk of damaged parts from stripped boards. With domestic suppliers unable to meet demand, the hardware maker simply offloads supply chain exposure onto its buyers. Shifting illicit procurement to customers directly transfers gray-market compliance and hardware failure risks to end buyers.