Huawei's memory problem is a policy problem, and the black market now filling the gap is the predictable result. According to The Information, Huawei is telling some customers to source the high-bandwidth memory for its AI chips themselves. The company plans to launch the Ascend 960DT early next year, which it says will double the performance of its current chips, but its Chinese suppliers cannot produce enough HBM. U.S. export rules block direct purchases from Samsung and SK Hynix, which together control over 80 percent of the global market.
The workaround described in the report is ingenious and corrosive. Smugglers bundle HBM with cheap server processors whose performance falls below the export threshold, ship the packages through Hong Kong, and then have workshops separate the memory from the processors. The process is fragile and the error rate is high, yet the report says the margins make it worth the trouble. A rule designed to slow China's access to advanced memory is instead creating a trade in which a single memory unit can cost far more than it did a year ago.
The price movement is the clearest signal of how the system is failing. The report cites a Shenzhen broker saying smuggled HBM3E has risen from a few hundred dollars to around $4,000 per unit in one year. With each AI chip needing six to eight units, the memory alone can reach $32,000 per chip. Such prices reward whoever controls the pipeline, not the engineers building the product, and they give every intermediary a reason to keep the loophole open.
The supply is also broader than smuggling. The report notes that stripped older Nvidia GPUs and excess inventory from chip designers who scrapped projects or cut orders feed the market as well. South Korea's customs authority had uncovered trade violations worth $560 million by May, already above the previous full-year record, and a third of that total involved strategic goods exported without proper authorization or with false declarations.
Washington should stop treating the memory bottleneck as a victory and start treating it as a warning. Tighter enforcement against transshipment through Hong Kong and closer coordination with Seoul's customs authorities would address the most visible leak. More important, regulators should close the gap that lets bundled packages slip past thresholds designed for standalone components. Until then, export controls will keep producing the very black market they were meant to deter.