Constrained by limited access to cutting-edge memory supplies, CXMT, China's leading memory chipmaker, intends to launch restricted manufacturing of HBM3E within the coming two months. The ambitious timeline comes despite a stark manufacturing reality: only between 20% and 30% of the company's output meets specifications, compared to roughly 70% for SK Hynix, which dominates the global market.

According to two individuals with knowledge of the situation who spoke to Reuters on Wednesday, 28 October, CXMT has already distributed HBM3E samples to multiple Chinese artificial intelligence chip designers. The Information had previously disclosed CXMT's intentions to manufacture HBM3E; Reuters provided the first public disclosure of both the yield percentages and production timeline. TNW has not independently confirmed these details.

A yield of 20% to 30%

High-bandwidth memory, or HBM, functions by stacking memory chips vertically to enable rapid data transmission to AI processors. This architecture represents an essential component in systems designed to train and execute large language models.

Manufacturing yield—the proportion of finished chips that satisfy required specifications—stands at approximately 20% to 30% for CXMT's operations, according to the sources. By contrast, SK Hynix achieves around 70%. Such depressed yields translate into substantial economic penalties, forcing manufacturers to discard or recycle significant quantities of defective components.

During performance evaluations, CXMT's HBM3E demonstrated characteristics more closely aligned with SK Hynix's previous-generation HBM3 than with its newer HBM3E offering, one source indicated. The company has provided customers with two distinct configurations: a baseline version and a revised variant designed to enhance manufacturing success rates. Pricing analysis suggests CXMT's memory will command a premium relative to equivalent international alternatives.

Why China is pressing ahead

Chinese artificial intelligence chipmakers face insufficient supplies of sophisticated memory components needed to expand manufacturing capacity, the sources explained. Following December 2024 when the United States strengthened export restrictions targeting certain advanced HBM products destined for China, domestic companies have increasingly turned to informal procurement channels. Through these unofficial routes, memory costs can escalate to several multiples of standard pricing.

During the previous month, Huawei, Cambricon, MetaX and Iluvatar CoreX all increased their AI chip pricing between 20% and 50% in response to climbing memory expenses, as Reuters documented earlier. Cambricon experienced disappointing recent sales figures as chip availability constraints intensified.

At least a generation behind

According to Counterpoint Research, SK Hynix commanded 50% of worldwide HBM revenue during the second quarter. Samsung captured 33% while Micron held 18%. Within the broader conventional memory sector, CXMT maintained 10% of global DRAM revenue, positioning itself as the fourth-largest conventional memory supplier globally, Counterpoint reported.

CXMT announced in September that it had achieved technological parity with Samsung and Micron in conventional memory categories. The company simultaneously reported a swing into profitability, generating nearly $20 billion in earnings this year as memory market prices increased substantially.

However, in the HBM segment, competitors have advanced considerably further. SK Hynix disclosed on Wednesday that its HBM4 had surpassed yield objectives and would overtake HBM3E in both shipment volumes and revenue during the fourth quarter. The company simultaneously reported record-breaking profitability in its quarterly results. Samsung announced in July that it had broadened HBM4 commercial deployments and had started shipping HBM4E evaluation units to customers.

Source: The Next Web