Huawei tells customers to find their own AI chip memory, effectively outsourcing procurement to the black market
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Huawei is instructing customers to independently source High-Bandwidth Memory (HBM) for its upcoming Ascend 960DT AI chips, effectively outsourcing procurement to the black market due to supply shortages and U.S. sanctions. Domestic Chinese suppliers cannot meet the demand, while direct purchases from global leaders Samsung and SK Hynix are blocked by export rules. To circumvent these restrictions, smugglers bundle HBM with low-performance processors to bypass thresholds, shipping them through Hong Kong before separating the components in China. This illicit trade has driven prices for HBM3E units up to approximately $4,000 each, significantly increasing costs for buyers who need six to eight units per chip. The shortage also fuels a secondary market involving stripped Nvidia GPUs and excess inventory from cancelled projects. South Korean authorities have reported record levels of illegal chip exports, uncovering violations worth hundreds of millions of dollars. Despite high error rates and fragile processes, the substantial profit margins keep this smuggling network active.
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