A chip smuggler has described a method for moving export-controlled high-bandwidth memory (HBM) from South Korea into China by attaching it to low-performance processors, according to The Information. The report says customs checks focus on server processors’ performance, rather than the other components installed alongside them.
The smuggler reportedly runs a chip design firm that makes inexpensive processors. Those chips are combined with HBM from Samsung and SK hynix, which is restricted from export to China on its own. The assembled boards are shipped to Hong Kong and then carried into Shenzhen by commuters, according to the account.
In Shenzhen, technicians reportedly heat the boards to loosen the solder and remove the valuable memory chips, discarding the processors and other components. The process has a high failure rate, but the cost of HBM can still make it profitable.
A Shenzhen-based chip broker told The Information that an HBM3E unit that sold for several hundred dollars in China a year earlier now costs about $4,000. The report says an AI chip typically needs six to eight high-end memory units, putting the memory cost at $24,000 to $32,000 per AI GPU.
The report describes HBM supply as a constraint for Chinese AI labs. Domestic manufacturer CXMT has begun risk production of HBM3E and is expected to start mass production by the end of the year, but reportedly faces low yields. Huawei has also told customers they need to source HBM for its next-generation 960DT processor themselves, as the company cannot buy memory from Samsung and SK hynix and Chinese suppliers cannot meet all its needs.
The smuggler reportedly fears authorities in South Korea and the United States will move to curb the trade as it becomes more common. The report also notes increased anti-smuggling activity in Taiwan and Malaysia.
Sources: Tom's Hardware.