How Smugglers Get Expensive Memory Chips to China from South Korea

AI Summary

Smugglers are reportedly exploiting a U.S. export-control loophole to move high-bandwidth memory chips from South Korea to China. Packaging the chips with lower-performance server processors can allow shipments to avoid restrictions that assess computing power based on the processor.

For an illustration of how porous U.S. restrictions on the shipment of AI chips to China can be, consider a technique that has begun to catch on among smugglers involving a key type of memory chip. While U.S. export regulations ban the shipment of high-bandwidth memory chips on their own to China, including from countries like South Korea, those rules have a loophole that allows the sales of those memory chips if they’re packaged together on plates with cheap server processors whose performance falls below the export restriction threshold. That’s because the computing power of the package gets determined by the server processor, not the memory chips, according to the rules.