China’s CXMT intends to commence production of HBM3E, a sophisticated form of high-bandwidth memory chip utilized with AI processors, even though only around 20 percent of the chips it manufactures are functional.
The move underscores China's significant lack of AI memory chips, crucial for a state-supported effort to create large-scale domestic alternatives to Nvidia’s AI processors in light of US restrictions on foreign technology access.
ChangXin Memory Technologies, the largest producer of dynamic random-access memory (DRAM) in China, has delivered HBM3E samples to various local AI chip developers. It anticipates starting small-scale production in the upcoming two months.
Yields, or the percentage of chips produced that meet standards, are only about 20 percent to 30 percent, in contrast to yields of approximately 70 percent at SK Hynix, the top company in the market.
High-bandwidth memory (HBM) is created by stacking memory chips vertically, allowing for fast data exchange with AI processors.
It is an essential part of the specialized chips employed to train and operate large language models.
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In December 2024, Washington tightened export restrictions on specific advanced HBM products headed for China. Chinese chip manufacturers have progressively turned to unofficial channels for the memory, where prices can be several times higher.
CXMT is moving forward despite poor yields as Chinese AI chip manufacturers have faced challenges in acquiring sufficient advanced memory to boost production. Low yields increase production costs since a significant portion of chips needs to be discarded or reworked.
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One of the individuals mentioned that CXMT’s HBM3E is anticipated to be pricier than similar offerings from foreign competitors. The organization started to create the technology in-house as early as 2024. In testing, CXMT’s HBM3E performance resembled SK Hynix’s earlier HBM3 more than the South Korean firm’s HBM3E.
CXMT has provided clients with two HBM3E versions, as stated by another source: one is a standard design and the other is an enhanced version with modifications aimed at boosting yields. The challenge of manufacturing HBM highlights the divide between CXMT and the industry’s prominent leaders — SK Hynix, Samsung Electronics, and Micron Technology — that control global supply.
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According to Counterpoint Research, SK Hynix accounted for 50 percent of worldwide HBM revenue in the second quarter, with Samsung at 33 percent and Micron at 18 percent. According to the research firm, the majority of income was generated from HBM3E.
According to Counterpoint, CXMT accounted for 10 percent of global DRAM revenue in the quarter, positioning it as the fourth-largest supplier of conventional memory chips worldwide. However, U.S. export restrictions hinder its ability to obtain certain cutting-edge chipmaking technology, complicating efforts to narrow the gap with international competitors. In July, Samsung announced the growth of HBM4 sales and the shipment of HBM4E samples to key customers, leaving CXMT at least one generation behind in HBM production for commercial use.