Abstract:
The United States’ export controls on China’s advanced semiconductor technology have once again exposed new loopholes. According to an investigative report by The Information, some smugglers are using special chip packaging methods to combine high-bandwidth memory (HBM) with low-end server processors, export them as ordinary computing chips, and then ship the entire set of components to China, where they are dismantled and recycle the high-end HBM memory.
This operation exploits a classification loophole in U.S. export control rules: independent HBM memory is strictly restricted, but if it has been integrated with a logical processor, its export classification may be determined based on the computing power of the processor itself, rather than solely based on the high-performance memory contained therein.
The report pointed out that this loophole is related to the relevant export control rules introduced by the United States in December 2024. The regulations at that time set up specific exemptions for HBM that had been integrated into logic chip products. Smugglers take advantage of this rule to package high-end memory with processors with extremely limited performance, so that the final product can avoid the regulatory threshold for high-performance computing products in terms of regulatory classification.
According to reports, one of the persons involved runs a company in South Korea that is ostensibly engaged in ordinary chip design business. He is about 40 years old, can speak Chinese and Korean proficiently, and is familiar with the Korean semiconductor industry chain.
This company will deliberately design server processors with low performance and almost no value for actual data center applications, but will reserve the conditions for packaging with high-end HBM memory during design. Since the computing power of the processor itself is weak, the entire packaged product may be classified into a less restrictive product category.
Relevant personnel will then look for professional packaging companies in Taiwan, South Korea and Southeast Asia to install the HBM memory stack and these low-end processors on the same substrate to form a complete package component.
After packaging is completed, the goods are declared for export according to the commodity classification code corresponding to the processor, and are first shipped to Hong Kong. Smugglers then transport these components into mainland China in suitcases, car trunks, and on cross-border transport personnel and daily commuters.
After the goods arrive in China, another group of personnel will disassemble the packaged components. They used heating equipment to melt the soldering material, removed the HBM memory stack from the substrate, and then discarded the low-end processors that were intended to meet export classification requirements.
This process requires high operational precision. Heating too fast or too slowly may cause the HBM stack to deform, crack, or even be completely damaged. Since HBM adopts a vertically stacked structure of multi-layer DRAM chips, the internal connections are extremely precise, and a slight carelessness during the disassembly process may cause irreversible damage.
However, those involved in this business appear to be willing to accept a certain scrap rate, as the market price of high-end HBM has increased significantly enough to cover losses in the dismantling process.
The report quoted a chip broker as saying that the price of HBM3E memory has risen from a few hundred dollars to about $4,000 in the past year. This means that even if part of the product is damaged during the disassembly process, it is still possible to make considerable profits as long as a sufficient amount of memory is successfully recovered.
This broker is from Shenzhen. He is only in his 20s and has been engaged in chip trading for about three years. He said that he first worked at a chip company, during which he established contacts with people related to the semiconductor supply chain, and some of them were familiar with how to extract high-end memory from the formal supply chains of Samsung and SK Hynix.
The reason why HBM has such high value is closely related to the architecture of the artificial intelligence accelerator. Modern AI chips need to process large amounts of data in a very short time, and the bandwidth of traditional DRAM can no longer meet the demand. Therefore, manufacturers use multi-layer DRAM vertical stacking to greatly improve memory bandwidth and data transmission efficiency.
A high-performance AI processor usually requires six to eight HBM stacks. If calculated at about US$4,000 per set, the cost of HBM memory alone reaches US$24,000 to US$32,000, not counting the costs of the AI processor itself, server systems, and power and cooling facilities.
This also explains why smugglers are willing to take high technical and legal risks and try to obtain these memories through complex packaging and disassembly processes.
The report also mentioned that in addition to HBM, Nvidia’s high-end B300 accelerator, which is on the U.S. export control list, has also appeared in the Chinese market through certain channels. Relevant cases further reflect that although the United States continues to strengthen export restrictions on advanced computing chips, the complexity of the global semiconductor supply chain still poses regulatory challenges.
For China, HBM supply shortage is one of the important bottlenecks in the development of high-performance artificial intelligence chips. Even if a competitive AI processor can be designed, the performance of the entire system may be severely limited if there is insufficient high-bandwidth memory.
Currently, local Chinese companies are advancing the research and development of HBM technology, but continued investment and time accumulation are still required from manufacturing processes, stacking technologies, yield rates to large-scale mass production capabilities. While domestic HBM supply has not fully met market demand, overseas high-end memory still has high commercial value.
It is worth noting that although this news was evaluated as "with a certain degree of credibility", it was not regarded as a fully confirmed fact. The main source cited is The Information, but the degree of independent corroboration is low. Therefore, the specific scale of smuggling, the companies involved, and the actual amount of HBM flowing into China have not yet been fully confirmed.
This incident reflects that the challenges faced by U.S. export controls go beyond preventing the export of entire high-performance processors. As semiconductor products become more and more complex, chips, memory, advanced packaging and substrates can be combined into different forms of goods. What regulatory authorities must judge is no longer just the performance of a single chip, but the actual technical capabilities of the entire packaging system.
If the practice of providing export declaration basis for high-end HBM through low-end processors does exist, the United States may need to further adjust export control rules in the future to bring the key semiconductor technologies contained within packaged components into the scope of stricter review. Otherwise, even if high-end AI processors cannot be exported directly, the most critical memory components may still enter the restricted market through other forms.
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