China’s CXMT to Begin Advanced AI Memory Chip Production Despite Low Yields

China's leading domestic memory-chip manufacturer, ChangXin Memory Technologies (CXMT), plans to begin limited production of advanced high-bandwidth memory chips used in artificial intelligence processors within the next two months, despite significant manufacturing challenges, according to a Reuters report published on October 28.

CXMT's planned production of HBM3E memory highlights China's efforts to strengthen its semiconductor supply chain as domestic artificial intelligence developers face difficulties obtaining advanced components from overseas suppliers. Two people familiar with the company's plans told Reuters that only around 20% to 30% of CXMT's HBM3E chips currently meet production specifications, substantially below the approximately 70% yield reported for South Korean industry leader SK Hynix.

The company has reportedly sent samples of its memory products to several Chinese AI chip designers. CXMT is providing both a standard version and a modified design intended to improve manufacturing yields, according to the report. The company did not respond to Reuters' request for comment.

High-bandwidth memory, commonly known as HBM, is a critical component in advanced AI processors. The technology stacks multiple memory chips vertically, allowing large volumes of data to move rapidly between memory and processors. This capability is particularly important for training and operating large language models, which require substantial computing resources.

China's domestic AI industry has been expanding as technology companies and research institutions seek alternatives to advanced foreign processors. However, access to high-performance memory remains a significant constraint. The United States tightened export controls on certain advanced HBM products destined for China in December 2024, making it more difficult for Chinese chipmakers to obtain components through conventional supply channels.

According to Reuters, Chinese companies have increasingly sought memory through unofficial channels, where products can cost several times more than normal. Rising memory costs have also affected domestic AI chip prices. Reuters reported in September that companies including Huawei, Cambricon, MetaX and Iluvatar CoreX had raised prices for current and next-generation AI chips by between 20% and 50%.

CXMT's decision to proceed despite low yields reflects the pressure on Chinese chipmakers to secure a reliable domestic supply. Low yields, however, can significantly increase production costs because a large proportion of manufactured chips must be discarded or reworked. Reuters reported that CXMT's HBM3E could cost more than comparable products from overseas competitors, potentially limiting its near-term commercial competitiveness.

The technological gap also remains substantial. In testing cited by Reuters, CXMT's HBM3E performance was closer to SK Hynix's previous-generation HBM3 than to the South Korean company's own HBM3E products.

Global HBM production is dominated by SK Hynix, Samsung Electronics and Micron Technology. SK Hynix accounted for approximately 50% of global HBM revenue in the second quarter, according to research firm Counterpoint Research figures cited by Reuters. Samsung held 33%, while Micron accounted for 18%.

Meanwhile, industry leaders are moving toward newer products. Samsung has reported expanding sales of HBM4, while SK Hynix said HBM4 was expected to exceed HBM3E in shipment volume and revenue in the fourth quarter.

For China, CXMT's planned launch represents a step toward greater semiconductor self-sufficiency, but not an immediate solution to the country's AI hardware constraints. Commercial success will depend on whether the company can improve yields, increase performance, control costs and scale production sufficiently to meet the needs of domestic chip designers.