Chinese memory maker CXMT is preparing to start limited production of HBM3E, a cutting-edge memory used in AI processors, even though only 20% to 30% of the produced chips meet quality standards. This move comes amid global supply constraints and increasing prices for advanced memory components.
- CXMT’s AI memory chip yields are notably low at 20%-30%.
- High-bandwidth memory (HBM3E) is crucial for AI chip performance.
- US export restrictions have tightened access to advanced memory in China.
What happened
China’s largest memory chipmaker, CXMT, plans to start limited production of HBM3E, an advanced high-bandwidth memory used in AI chips, within the next two months. Despite only about 20% to 30% of the chips meeting the required specifications, CXMT has already sent samples to multiple Chinese AI chip designers.
The low yield rate means many chips will be discarded or require rework, making production more expensive than competitors like SK Hynix, whose yields reach around 70%. CXMT’s initial HBM3E chips performed closer to SK Hynix’s older HBM3 rather than the newer HBM3E standard.
Why it matters
Advanced high-bandwidth memory like HBM3E is essential for AI processors to handle large data efficiently, critical for training and running large language models. China faces significant supply challenges due to tightened US export controls on advanced memory products since December 2024.
This limitation has forced Chinese firms to source expensive memory through unofficial channels, driving up AI chip production costs significantly, which has already led to price hikes of 20% to 50% by key Chinese AI chipmakers. CXMT’s move to produce HBM3E domestically, despite low yields, reflects China’s strategic effort to reduce dependence on foreign suppliers.
What to watch next
Observers should monitor how CXMT’s production ramp-up impacts the cost and availability of HBM3E memory in China’s AI chip market, and whether yield improvements will follow. The company is testing two chip versions, including one designed to improve yields, which could influence market competitiveness.
Outside China, SK Hynix and Samsung continue advancing their HBM product lines, with SK Hynix reporting improved HBM4 yields and Samsung expanding HBM4 sales. The relative progress between these companies and CXMT will shape the global market dynamics for AI memory technologies.