Smugglers are exploiting a loophole in U.S. export restrictions to bring advanced high-bandwidth memory (HBM) chips into China by packaging them with lower-performance server processors, since rules assess the packages’ computing power based on the processors rather than the memory, The Information reported, citing sources. Technicians in China heat the packages to soften the solder before removing the HBM stacks and discarding the processors. The smuggled memory reportedly often ends up with customers of Huawei Technologies, whose next-generation Ascend 960DT AI accelerator is expected to rely heavily on HBM from Samsung Electronics and SK hynix. With U.S. export restrictions preventing Huawei from obtaining sufficient HBM directly from the South Korean chipmakers, the company has reportedly asked some AI chip customers to source the memory themselves. Expected in the first quarter of 2027, the Ascend 960DT is set to double the memory bandwidth and capacity of Huawei’s current AI processor. Huawei is also working with DeepSeek to optimize the chip for AI model pre-training. China’s domestic memory suppliers remain unable to fill the gap: Fujian Jinhua Integrated Circuit trails its South Korean competitors technologically and lacks the capacity to meet Huawei’s customer demand, while CXMT’s HBM3E yields remain at just 20%–30%, well below the approximately 70% achieved by SK hynix, Reuters reported. HBM shortages are also pushing up Huawei’s chip prices;