China's CXMT to Start Advanced HBM Memory Production Despite Low Yields, Reuters Reports

China's top DRAM manufacturer, ChangXin Memory Technologies (CXMT), is preparing to initiate limited production of advanced high-bandwidth memory (HBM) for AI processors within the next two months, despite facing significant manufacturing challenges, according to a Reuters report. The move underscores China's urgent push for technological self-sufficiency in the critical semiconductor sector.

Production Push Despite Hurdles

CXMT is reportedly moving forward with its HBM3E memory plans even as its manufacturing yields are estimated to be just 20% to 30%. This rate, which measures the proportion of usable chips from a production wafer, stands in stark contrast to the roughly 70% yield achieved by market leader SK Hynix of South Korea, Reuters reported.

Low yields significantly increase production costs, as a large percentage of the manufactured chips must be discarded or reworked. Despite these hurdles, the company has already sent samples of its HBM chips to several domestic AI chip designers for testing, according to the report.

Strategic Importance for China's AI Ambitions

High-Bandwidth Memory is a crucial component for the powerful AI accelerators used to train and operate large language models. The technology involves stacking memory chips vertically to enable extremely fast data transfer between the memory and the processor, a key requirement for high-performance computing.

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CXMT's effort is a key part of China's broader strategy to build a domestic supply chain for AI and reduce its dependence on foreign technology. Access to a stable HBM supply is essential for Chinese companies developing homegrown alternatives to the dominant AI chips produced by firms like Nvidia.

Navigating US Export Controls

The push for domestic HBM production comes in response to escalating U.S. export controls targeting China's tech sector. In December 2024, Washington tightened restrictions on the sale of certain advanced HBM products to China, creating a severe shortage for the country's chipmakers.

According to the Reuters report, this scarcity has forced some Chinese firms to source advanced memory through unofficial channels, paying several times the standard market price to secure the necessary components for their AI hardware.