Huawei tells AI chip customers to buy their own memory on the black market

Smuggled high-bandwidth memory now costs around $4,000 per unit, up from a few hundred dollars a year ago, because Huawei cannot legally buy the HBM its AI chips need. That price comes from a broker in Shenzhen, and it captures the entire story of the U.S.-China chip war in one number. Huawei has run out of options on the legitimate market, so it is telling its customers to find their own supply. In practice, that means the black market.

According to The Information, Huawei has begun directing some customers to procure memory for its AI chips themselves. The company is not abandoning the market — far from it. It plans to launch the Ascend 960DT early next year, a chip it says will double the performance of its current hardware. But the plan collides with two hard constraints: Huawei's Chinese suppliers cannot produce enough High-Bandwidth Memory (HBM), and U.S. export rules block direct purchases from Samsung and SK Hynix. Those two South Korean companies control more than 80 percent of the global HBM market.

Why does memory decide who can build AI chips?

HBM is the component that lets AI accelerators move data fast enough to train and run large models. Every serious AI chip needs stacks of it. Huawei's Ascend line is China's most prominent answer to Nvidia's dominant GPUs, and Beijing has backed it as a matter of technological sovereignty. A domestic AI chip without domestic HBM, however, is a promise the country's supply chain cannot yet keep.

The shortage matters beyond Huawei. If China's leading AI chipmaker cannot feed its accelerators, the bottleneck slows every Chinese lab and company that depends on domestic compute rather than restricted Nvidia hardware. Memory, not processors, has become the choke point — and U.S. regulators appear to have found it deliberately.

How does the smuggling pipeline actually work?

Smugglers have found a loophole in the U.S. export rules, and it hinges on bundling. They pair HBM modules with cheap server processors whose performance falls below the export-control threshold. Because the package as a whole looks like a low-end shipment, it clears restrictions that would stop standalone HBM. The goods route into China through Hong Kong. Once they arrive, workshops physically separate the memory chips from the processors.

The process is fragile. The error rate is high, meaning chips get damaged or destroyed during extraction. But the margins have grown so large that the losses don't matter. When a memory unit that cost a few hundred dollars sells for $4,000, a workshop can break plenty of chips and still profit.

The Shenzhen broker's price carries a multiplier effect. Each AI chip needs six to eight HBM units. At current black market rates, the memory alone for a single chip can cost up to $32,000. That figure rivals or exceeds the price of entire top-tier AI accelerators on the open Western market, and it lands entirely on Huawei's Chinese customers.

Where else does the supply come from?

Smuggling is not the only feed line into this gray market. Two other streams keep it stocked:

• Stripped Nvidia GPUs. Older Nvidia graphics cards get pulled apart for parts, and their memory re-enters the market through informal channels.
• Excess inventory. Chip designers that scrapped projects or cut orders release surplus HBM, which flows toward buyers who will pay a premium regardless of paperwork.

This patchwork supply explains why Huawei feels safe outsourcing procurement to its customers. The company cannot guarantee memory, but the market — legal, semi-legal and illegal — has found ways to make it available at a price.

What are the numbers telling us?

South Korea's customs authority offers the clearest official measure of how much rule-bending is happening. By May, it had uncovered trade violations worth $560 million, already surpassing the previous full-year record before the year was even half over. A third of that total involved strategic goods — chips exported without proper authorization or shipped under false declarations.

That record pace suggests the smuggling The Information describes is not a fringe activity. It is a measurable shift in how semiconductors move across borders, with South Korea — home to Samsung and SK Hynix, the two companies most restricted from selling HBM to China — sitting at the center of the enforcement problem.

What happens next?

The immediate test comes early next year, when Huawei plans to launch the Ascend 960DT with double the performance of its current chips. The company has the design. What it lacks is a legal, scalable source of the memory that design requires, and U.S. export rules are written specifically to keep it that way.

Until Chinese HBM production catches up, Huawei's customers will keep paying black market prices — or doing without. And every $4,000 memory unit bought in Shenzhen is evidence that export controls redirect trade more often than they stop it.