According to a November 2, 2026 report by The Information, smuggled HBM3E (high-bandwidth memory) is trading on China's gray market for about $4,000 per unit. If an AI chip carries six to eight HBM stacks, the memory alone would come to $24,000–$32,000 (roughly 3.79 million to 5.05 million yen, converted at 157.95 yen to the dollar). Under US export control rules, a product that combines HBM and logic in the same package and whose primary function is computation is judged on the processor's performance when determining whether it is controlled. If shipments are continuing by exploiting this mechanism, the controls may be working not by cutting off supply entirely but by raising China's procurement costs. The same report also said Huawei asked some customers to source HBM themselves for its next AI chip. Two things support this view: the US rule introduced in December 2024, and reports that a similar method was used in late 2024 and early 2025.
Huawei Reportedly Asks Some Customers to Source HBM Themselves
According to The Information, Huawei recently told some customers that it plans to use a substantial amount of Samsung and SK hynix HBM in its next flagship AI chip, the "Ascend 960DT." Because it cannot buy directly from the Korean manufacturers, it reportedly asked some customers who ordered the AI chips to secure the memory themselves. At "Huawei Connect 2026" on September 17, 2026, Huawei presented a plan to launch the Ascend 960DT in the first quarter of 2027. As of 2025, the launch had been planned for the fourth quarter of 2027, so the schedule has been moved up by three quarters. Huawei announced its own HBM technologies, "HiBL 1.0" and "HiZQ 2.0," in September 2025, but has not disclosed who manufactures the memory dies. SK hynix, for its part, says it complies with relevant laws, including US and South Korean export control rules, and has not supplied products to Huawei since US export restrictions took effect in 2020.
The reported smuggling method involves mounting HBM on the same board as a low-performance server processor and shipping them to China as a single product. After arrival in China, technicians heat the board to melt the solder, remove the HBM, and discard the processor. However, if the heating is too fast or too prolonged, the HBM stack can warp or crack, so the failure rate of the work is reportedly high. According to a Chinese broker quoted in the report, the price of HBM3E has jumped from a few hundred dollars a year ago to about $4,000 now.
US Export Rules Judge Compute-Focused Packages by the Processor's Performance
The interim final rule that the Bureau of Industry and Security (BIS) at the US Department of Commerce put into effect on December 2, 2024 created Export Control Classification Number (ECCN) "3A090.c," which covers HBM with a memory bandwidth density above 2 GB/s/mm². Memory bandwidth density is the bandwidth of a memory package or stack (GB/s) divided by its area (mm²). In the rule, BIS stated that all HBM stacks being produced at the time exceeded this threshold. The rule itself took effect on December 2, but the compliance date for the HBM portion was December 31 of that month.
What matters is the content of a technical note in the same rule. This note excludes from 3A090.c chips that combine HBM and logic in the same package when their primary function is computation. By contrast, HBM that is fixed to logic having a control interface or PHY (physical layer circuitry) falls within the controls. Likewise, License Exception HBM under the current US export regulations, 15 CFR 740.25 (an exception allowing HBM meeting certain conditions to be exported without an individual license), requires that the finished same-package chip not exceed the processor performance thresholds in 3A090.a or 3A090.b. In other words, the text builds in a mechanism under which, for finished products whose primary function is computation, whether they are controlled is determined not by the HBM's own performance but by the logic's performance thresholds.
Under this provision, a package that combines HBM with a low-performance processor falls below the processor thresholds and therefore would not fall under 3A090.c, which targets standalone HBM. The method reported this time appears to exploit this classification mechanism. However, other conditions may apply, such as provisions presuming that exports by companies engaged in manufacturing or back-end processing of advanced logic ICs fall under 3A090.a. This article has not individually verified these conditions, so it cannot conclude that the reported products are actually outside export controls. Whether individual transactions are lawful would also need to be judged separately.
Methods that exploit this treatment of same-package products were reportedly also used in late 2024 and early 2025. The November 2026 report means that a similar method has been observed again. The related regulations and reporting timeline are as follows.
| Date | Event | Source |
|---|---|---|
| December 2, 2024 | New BIS rule takes effect. Compliance date for the HBM portion is December 31 | US Federal Register |
| Late 2024 to early 2025 | Several Taiwanese companies reportedly loosely attached Samsung HBM to simple processors and shipped them to China | SemiAnalysis report cited in an analysis by IAPS researchers |
| September 10, 2026 | Huawei's quoted price for the 950DT rises above 250,000 yuan. HBM prices on China's gray market reported at several times those outside China | Reuters |
| September 17, 2026 | Huawei announces at Huawei Connect 2026 that Ascend 960DT will launch in Q1 2027 | Huawei official announcement |
| November 2, 2026 | HBM3E brought in in the same package as a low-performance processor and removed in China reported trading at about $4,000 | The Information |
The late 2024 to early 2025 case is secondary information based on a SemiAnalysis report cited in an analysis by IAPS researchers published in AI Frontiers, and the date of the original report could not be confirmed. SemiAnalysis reportedly judged at the time that the method had been shut down. In November 2026, however, a method exploiting the same regulatory treatment was reported again. The regulatory bases we could confirm are the December 2024 rule and the current 15 CFR 740.25; we could not confirm whether the technical note was amended in between.
The burden of this procurement method is also heavy in terms of price. At $4,000 per HBM3E unit, an AI chip carrying six units would cost $24,000 and one carrying eight would cost $32,000. Converted at 157.95 yen to the dollar, one HBM3E unit is equivalent to about 630,000 yen. This estimate, however, excludes the cost of the chip itself, servers, power and so on. The $4,000 figure also rests on the testimony of a single Chinese broker, and the capacity of the HBM stacks in question is unknown. Because the global HBM shortage also contributes to the price increase, the entire amount cannot be regarded as a premium caused by export controls.
Is the Jump in HBM3E From a Few Hundred Dollars to $4,000 an Export Control Effect?
One can argue that the price surge is evidence that export controls are squeezing supply. If HBM3E rose from a few hundred dollars to about $4,000 in just one year, it is natural to think the controls have made procurement harder. SemiAnalysis also reportedly concluded that the smuggling route for the similar method reported in 2025 had been shut down, citing the return of the companies involved to normal sales levels.
Enforcement of export controls has indeed been strengthened. According to statistics announced by the Korea Customs Service on July 6, 2026, the value of crimes violating trade security caught through the end of May that year reached 770.3 billion won, exceeding the 655.6 billion won for all of 2025 and setting a record. Of this, illegal exports of strategic items accounted for 243.0 billion won. However, these figures cover all crimes, including export control violations and falsified origin, and the largest single case was a 476.8 billion won matter involving secondary battery manufacturing process equipment. They are not statistics directly showing the scale of HBM smuggling.
Another smuggler interviewed by The Information also testified that the risk of being caught has grown as more operators use the same route. This smuggler reportedly intends to sell most of his business stake in 2027. Huawei's request that some customers source HBM themselves also suggests it has not secured a stable supply. The fact that controls are making procurement harder is therefore consistent with this report.
On the other hand, it is also inappropriate to attribute the entire price increase to US export controls. Reuters reported on September 10, 2026, citing two sources, that Huawei had raised its quoted price for the Ascend 950DT card to more than 250,000 yuan. Depending on contract terms, this was a 20–50% increase from quotes two months earlier, and the HBM supply shortage was cited as a background factor in Chinese AI chipmakers' price hikes. Huawei did not respond to the report. The global HBM shortage also affects the price of smuggled goods, so the price rise in the Chinese market cannot be explained by regulation alone.
Still, there are grounds for the view that export controls are pushing up China's procurement costs, because the global HBM shortage alone cannot sufficiently explain the price gap between China and the rest of the world. In the same article, Reuters reported that since the tightening of rules in December 2024, Chinese chipmakers have been securing HBM on the gray market at prices several times what buyers outside China pay. The global shortage also affects buyers outside China, so this gap is thought to include a premium created by export barriers to China (editorial inference).
Increased enforcement, smugglers' intent to exit, and the 2025 judgment that a smuggling route had been shut down are not necessarily inconsistent with this view. Even if regulation adds effort and cost to shipping and procurement, it does not necessarily stop HBM inflows completely. However, we could not confirm data showing annual smuggling volumes, so it is not possible to assess how much the regulation reduces inflows.
Focus Turns to BIS Rule Changes and the Ascend 960DT Shipment Timing
The view that export controls are acting not by completely cutting off supply but by raising procurement costs can be tested by three upcoming developments.
First is an amendment to the technical note by BIS. If the technical note in the current 3A090 is changed so that HBM mounted in the same package as a processor also becomes controlled according to quantity or bandwidth, shipments using the existing classification approach would become difficult. Because the mechanism for determining what is controlled would itself change, the premise that the current method will continue to be used would collapse.
Second is the price gap for HBM3E between China's gray market and the rest of the world. Even if the price of smuggled HBM3E fell to the few-hundred-dollar range, that alone would not indicate that the effect of export controls had weakened. If the global HBM shortage eases, prices could fall outside China as well. What matters is not the absolute price level but whether the gap Reuters reported, "several times" the price outside China, narrows.
Third is whether Huawei's Ascend 960DT ships on schedule in the first quarter of 2027. If the launch is delayed, it would be material for considering whether HBM procurement volume is a constraint. However, delays in product launches can have multiple causes, such as manufacturing yield or design problems, so HBM shortages cannot be singled out as the cause.
Separately from changes to the export controls themselves, expansion of China's domestic HBM production capacity would also affect the price gap. At the time of Reuters' September 2026 report, CXMT was expected to begin limited HBM3E production in about two months. Its yield, however, was said to be around 20–30%, far lower than SK hynix's roughly 70%. If the supply of Chinese-made HBM grows enough to meet domestic demand, dependence on smuggled goods, and the premium that comes with it, could shrink.
As long as the current rules judge same-package products whose primary function is computation by the processor's performance, it will be difficult to block HBM inflows completely. At least for now, the controls appear to be acting by raising China's procurement costs and risks. However, the effect of the global HBM shortage is also large, and the burden attributable to the rules cannot be precisely isolated. Whether BIS amends the technical note will be a key factor in whether this procurement method can continue.