A chip smuggler describes how a single loophole lets banned South Korean RAM reach China's AI labs.

Advanced memory chips barred under strict export controls are reportedly crossing borders directly into Chinese artificial intelligence (AI) laboratories, exploiting a regulatory blind spot in international trade rules, according to a report.

A memory smuggler has reportedly revealed how export-controlled High Bandwidth Memory (HBM), manufactured in South Korea by Samsung and SK Hynix, reaches mainland China. Under current US and South Korean trade restrictions, standalone exports of cutting-edge HBM units to China are prohibited. The smuggler, who runs a chip design venture, identified a way around the embargo, The Information reports. The report, cited by Tom's Hardware, says that export controls measure only the raw computing performance of the server processor itself, without evaluating secondary components attached to the board. By designing inexpensive, low-performing processors that fall comfortably below the legal restriction limits, the firm attaches premium Samsung and SK Hynix HBM directly onto the modules. Because the central processor is deemed harmless under export criteria, the complete board clears customs inspections without raising red flags.

**How high-cost, banned memory is shipped into China**

Moving the hardware into mainland China involves a delicate process. First, the low-end boards carrying top-tier memory arrive in Hong Kong. From there, daily commuters carry the hardware in personal luggage across the border into Shenzhen. In Shenzhen, the hardware is taken to local workshops, where technicians heat the circuit boards to soften the solder, carefully pry off the valuable HBM units, and discard the cheap processors and host boards. Although removing memory from boards carries a high failure rate, the surging street value of functional HBM units makes the risky operation profitable.

**Prices skyrocket as the AI race accelerates**

The black market for advanced memory has expanded rapidly alongside China's push to train competitive AI models. A Shenzhen-based broker who facilitates transactions between smugglers and hardware-starved domestic tech firms says street prices have reached historic highs. "A year ago, a single HBM3E unit changed hands in China for several hundred dollars. Today it's about $4,000," the broker told The Information. Modern AI accelerators require between six and eight high-end memory units to operate. At current black-market rates, brokers generate $24,000 to $32,000 in memory for the bundle needed to run a single AI graphics processing unit (GPU).