ChainCatcher report: The Information investigated a smuggling network for high-end memory chips in South Korea and interviewed a 20-something distributor in Shenzhen. Originally employed at a chip company, he leveraged his professional connections to transition into the black market chip trade; in just three years, he has amassed luxury possessions and spends his days facilitating transactions between buyers and sellers. Since late 2024, the U.S. has restricted exports of advanced high-bandwidth memory (HBM) to China, but regulatory loopholes exist: while standalone HBM exports are controlled, HBM packaged together with processors may be classified under processor performance thresholds, potentially evading restrictions. A 40-something smuggler controls a chip design firm that specializes in designing low-cost, low-performance server processors—chips with little market demand but used as cover to procure premium South Korean HBM. Packaging facilities mount HBM from Samsung and SK Hynix onto the same substrate as these processors, declaring the shipments as low-performance processors for export. After arriving in mainland China via Hong Kong, workshops use heat to dismantle the HBM chips, discarding the cheap processors—careless handling often damages the memory. A stack of HBM3E that sold for a few hundred dollars a year ago now commands around $4,000 on China’s black market. A typical AI chip requires six to eight stacks, meaning memory alone costs $24,000 to $32,000. Some of this memory ultimately reaches Huawei customers. Huawei’s next-generation Ascend 960DT is scheduled for release in Q1 2027, but domestic HBM shortages have led Huawei to instruct certain clients to source memory independently. As more imitators enter the market, the smuggler responsible for procuring chips from South Korea plans to sell his controlling stake next year, fearing that increased exposure will trigger stricter scrutiny from South Korean and U.S. regulators.
The Investigation Examines the HBM Smuggling Chain from South Korea to China
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Summary
The Information has exposed a smuggling network transporting high-bandwidth memory (HBM) chips from South Korea to China. A dealer in his twenties in Shenzhen, formerly employed by a chip company, now operates in the black market. Smugglers exploit a U.S. export loophole by packaging HBM chips alongside low-performance processors. A smuggler in his forties runs a chip design firm as a front to create these processors. Once exported, the HBM chips are extracted in China. On-chain data shows HBM3E prices have reached $4,000 per stack, with some chips reaching Huawei clients. Altcoins to watch may be affected by such supply chain disruptions.
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