Huawei has advised customers to secure their own high-performance memory for Ascend AI chips after U.S. export rules blocked direct purchases from Samsung and SK Hynix. The company’s Chinese suppliers cannot manufacture enough High-Bandwidth Memory (HBM) to meet demand, forcing the firm to shift responsibility for supply chains to its clients. Smugglers are now exploiting a U.S. regulatory loophole by bundling HBM chips with low-end processors to ship to China.
Smuggled HBM3E memory prices have surged to about $4,000 per unit in one year, while a single AI chip requiring six to eight memory units can cost up to $32,000 on the black market. South Korean customs uncovered $560 million in trade violations involving unauthorized chip exports by May, highlighting the scale of the illicit trade. Huawei’s inability to source memory internally is driving these extreme price increases for its customers.
This shortage forces Chinese AI developers to pay premium prices for memory components, potentially slowing the deployment of advanced AI models. The reliance on smuggled hardware also introduces significant compliance risks for companies using these chips. Users building with AI hardware must verify the legality of their supply chains and budget for potential price volatility in the memory market.
