China's CXMT to Start Advanced AI Memory Production Despite Low Yields, Sources Say

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China's largest memory chipmaker, ChangXin Memory Technologies (CXMT), plans to start production of HBM3E, an advanced type of high-bandwidth memory used alongside AI processors, even though only about 20 to 30 percent of the chips it makes are currently usable, two people familiar with the matter told Reuters on Tuesday. The company has already sent HBM3E samples to several domestic AI chip designers and expects to begin limited production over the next two months.

The decision underlines how acute China's shortage of AI memory has become. High-bandwidth memory works by stacking memory chips vertically so they can exchange data rapidly with AI processors, making it a crucial component for training and running large language models. Market leader SK Hynix of South Korea achieves yields of around 70 percent, so CXMT's low success rate means most of what it produces will be discarded — an expensive way to make chips, but one Beijing's push for domestic alternatives to Nvidia's processors may make worthwhile.

Washington tightened export controls on certain advanced HBM products bound for China in December 2024, and Chinese chipmakers have increasingly sought the memory through unofficial channels, where it can cost several times more, the sources said. CXMT declined to comment and SK Hynix did not immediately respond to a request for comment on the yield estimate. If CXMT can raise its yields over time, it would ease a major bottleneck for China's AI industry; if not, the project will remain a costly stopgap.

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