China's CXMT to start advanced AI memory production despite poor yields, sources say

What happened

China's CXMT plans to start production of HBM3E, an advanced high-bandwidth memory chip used with AI processors, despite only about 20% to 30% of its chips meeting specifications, two sources said. It has sent samples to domestic AI chip designers.

Confirmed

Global impact / market context

China faces a severe shortage of AI memory chips, which are essential to its government-backed effort to build domestic alternatives to Nvidia's processors amid US curbs. CXMT's low yields mean high waste and cost, so output may stay limited and expensive, slowing that push.

Analyst inference

CXMT is China's largest maker of conventional DRAM memory. Its move into advanced AI memory could eventually reduce reliance on foreign suppliers like SK Hynix, whose yields are around 70%, but low yields mean near-term output is likely small and costly to produce.

Analyst inference

What to watch

1. CXMT expects to begin limited HBM3E production within the next two months, according to one source, so watch whether that timeline holds and what initial volumes look like. Confirmed
2. Watch whether CXMT improves yields from the current roughly 20% to 30% toward SK Hynix's around 70%, since higher yields lower waste and cost per usable chip. Analyst inference
3. Watch whether domestic AI chip designers adopt CXMT's samples in their processors, which would signal real demand and progress toward replacing foreign-made AI memory. Analyst inference

Evidence

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