Report: Smugglers attach high-end memory to weak processors to move it into China

Smugglers are reportedly combining high-bandwidth memory (HBM) from Samsung and SK Hynix with deliberately weak processors to ship the packages to China. According to The Information, workshops in Shenzhen heat the packages, remove the memory stacks and discard the processors. The recovered HBM3E is reportedly sold for around $4,000 per stack, with Huawei customers among the buyers.

The reported route relies on a December 2024 technical note from the US Commerce Department’s Bureau of Industry and Security (BIS). The rules require a license for shipments of certain standalone HBM to China, while an exclusion covers some co-packaged memory and logic chips, assessed according to their processing performance. Pairing HBM with a low-performance processor can therefore make a package appear to qualify as a processor for export purposes.

The exemption applies only when processing is the package’s “dominant function.” The report describes processors so weak that data centers would not buy them, raising questions about whether processing is genuinely the package’s main function. BIS rules also retain controls when HBM is attached to a logic die that serves only as a physical-layer interface.

The method has precedent. SemiAnalysis reported in April 2025 that HBM2E had been packaged with a low-cost logic die before being sent to China, where the memory could reportedly be removed. Faraday Technology denied breaching export rules and said it had no ties to Huawei. Its president, Steve Wang, said recovering HBM by desoldering was impossible. The latest report says Shenzhen workshops are now attempting the process with HBM3E, which can be warped or cracked by excessive or rapid heating.

A Shenzhen broker told The Information that a stack that sold for a few hundred dollars in China a year earlier was then fetching about $4,000. SK hynix said it complies with US and South Korean export controls and has not supplied Huawei since US restrictions took effect in 2020. Samsung, BIS and the South Korean government had not publicly commented in the coverage cited.

The Information’s account relies heavily on anonymous dealers and does not provide shipment volumes, seizures or failure-rate figures. The earlier reporting by SemiAnalysis, however, documented a similar packaging approach more than 18 months ago.

Sources: TechRadar.