Chinese AI chip designers cut off from advanced Korean HBM gain a domestic supplier, but at yields near a third of SK Hynix's, each usable stack will cost more.
ChangXin Memory Technologies (CXMT), China’s largest maker of DRAM memory chips, plans to begin limited production of HBM3E within about two months even though only a fraction of its output meets specification, Reuters reported on October 28, citing two people familiar with the matter. HBM3E, the fifth generation of high-bandwidth memory, is the stacked memory that sits beside AI accelerators and feeds them data.
CXMT’s HBM3E yields are estimated at 20% to 30%, against about 70% at SK Hynix, the market leader. The company has already sent samples to several domestic AI chip designers, in two versions: a standard design and an updated one intended to raise yields. In testing, its HBM3E performed closer to SK Hynix’s previous-generation HBM3 than to that company’s HBM3E, according to one of the people, and it is expected to cost more than comparable foreign parts.
CXMT did not respond to Reuters’ request for comment, and SK Hynix declined to comment, according to an updated version of the report. Reuters said its account added detail to an earlier report by The Information. The plan, if it proceeds, would give Chinese AI chipmakers a home-grown source for the component that US export controls have made hardest to buy.
Low yields are the price of a domestic HBM supply
Yield, the share of chips on a wafer that work, drives the economics of HBM more than almost any other memory product, because several DRAM dies are stacked and bonded together and a single bad die can ruin a stack. At 20% to 30%, CXMT will discard or rework most of what it makes, which raises the cost of each usable unit, as TrendForce noted in its summary of the report.
Chinese buyers have accepted that trade-off because the alternatives are worse. Washington tightened controls on exports of certain advanced HBM to China in December 2024, and Chinese companies have since turned to unofficial channels at several times the usual price, Reuters said. US rules also restrict CXMT’s access to the most advanced chipmaking tools. Taiwan’s Economic Daily News framed the yield figure as evidence of how severe China’s shortage of AI memory has become.
EastFrontier reported in September that CXMT was moving into HBM3E for domestic AI chip designers. At that time, Korea JoongAng Daily, citing The Information, reported that small-scale output had begun and that Alibaba’s T-Head and Cambricon were testing the memory. The new report suggests that testing has now reached the point of a production decision, with yields still far from commercial norms.
CXMT remains a generation behind in a market led by three suppliers
SK Hynix held 50% of global HBM revenue in the second quarter, Samsung 33% and Micron 18%, according to Counterpoint Research figures cited by Reuters. CXMT, which took 10% of global DRAM revenue in the same quarter to rank fourth, has no meaningful share of HBM yet. Its rivals are already moving on: SK Hynix said its HBM4 had beaten its yield target and would overtake HBM3E in shipments and revenue in the fourth quarter, and Samsung said in July that it had expanded HBM4 sales. Reuters concluded that the gap leaves CXMT at least one generation behind the South Korean makers in commercial HBM.
The company’s core business gives it room to absorb losses on early HBM. CXMT listed on Shanghai’s STAR Market in July, raising RMB57.9 billion. On October 28, Bank of America started coverage of the shares with a buy rating and a RMB65 target price, citing a DRAM upcycle, IT Home reported. The bank forecast DRAM average selling prices rising 9% next year and CXMT capacity reaching about 300,000 wafers a month by year-end, roughly 15% of global supply. Its note did not address HBM.
Customer qualification will decide whether output reaches AI chips
The next signal is which Chinese accelerators carry CXMT memory. Domestic chip designers including Huawei, Cambricon, MetaX and Iluvatar CoreX have raised AI chip prices by 20% to 50%, according to an earlier Reuters report cited by TrendForce. A CXMT supply, even an expensive one, could steady those designers’ bills of materials if it arrives in volume.
Readers following the company should watch for three disclosures: confirmation from CXMT itself, which has not commented; the stack height and bandwidth of the part that ships; and any named customer adopting it in a product. An improvement in yields toward 50% would change the cost picture far more than the start of production itself.