China’s CXMT Pushes Ahead With AI Memory Despite Low Yields

China's CXMT, the country's largest memory-chip manufacturer, is set to commence limited production of advanced artificial intelligence memory known as HBM3E within the next two months. Despite this, the company's chips currently only meet specifications in 20% to 30% of cases, with the remaining 70% to 80% failing to pass quality requirements. This decision comes as Chinese AI chipmakers face supply shortages that have led to price hikes of up to 50%.

CXMT has already distributed samples of its HBM3E memory to several Chinese AI chip designers, according to Reuters. However, the expected production output and launch date remain undisclosed. The company's yield rate for HBM3E is significantly lower compared to South Korea's SK Hynix, which achieved a yield of approximately 70% in the same market.

The push for domestic memory production is driven by a shortage of high-bandwidth memory (HBM) chips, which are crucial components in AI processors. High-profile AI chipmakers such as Huawei, Cambricon, MetaX, and Iluvatar CoreX have recently increased the prices of their AI chips by 20% to 50% due to memory cost pressures. CXMT's low yields and reported performance gap suggest that its chips are unlikely to quickly resolve the memory shortage, but they could provide an alternative source of supply for Chinese AI designers if they can deliver enough chips at competitive prices.

The manufacturing yield of a chip represents the proportion of chips that meet the required specifications. With a reported yield of 20% to 30%, most of CXMT's output would not be considered usable at this stage of production, leading to increased costs per usable chip. Performance is another concern, as CXMT's HBM3E is said to be closer in performance to SK Hynix's previous-generation HBM3 rather than its own HBM3E, indicating a lag behind established suppliers in the commercial rollout of advanced HBM technology.