CXMT to Start HBM3E Production at 20-30% Yields Despite Heavy Losses

ChangXin Memory Technologies (CXMT) plans to begin limited production of HBM3E within two months even though only 20% to 30% of the chips it produces meet specifications, two people familiar with the matter said. SK Hynix, the market leader, achieves yields of around 70% on comparable products.

The decision, reported by Reuters on October 28, underscores the severity of China's shortage of high-bandwidth memory — the component AI processors depend on to train and run large language models. The people declined to be identified because the plans are not public. CXMT did not respond to a request for comment, and SK Hynix did not immediately respond on the yield estimate.

What has CXMT actually done?

CXMT, China's largest maker of dynamic random-access memory (DRAM), has sent HBM3E samples to several domestic AI chip designers, according to the sources. The Information first reported the plans; Reuters is reporting the yield figures and delivery timeline for the first time.

The company sent customers two HBM3E versions: a standard design and an updated one with changes intended to improve yields. It began developing the technology internally as early as 2024. CXMT's HBM3E is expected to cost more than comparable products from overseas rivals, one source said.

Why produce chips at a 70-80% loss rate?

Washington tightened export controls on certain advanced HBM products bound for China in December 2024. Chinese chipmakers have increasingly sought the memory through unofficial channels, where it can cost several times more, the people said.

Low yields make production expensive because a large share of chips must be discarded or reworked. CXMT is pressing ahead anyway because Chinese AI chipmakers have failed to secure enough advanced memory to raise output. Reuters reported in September that Huawei, Cambricon, MetaX and Iluvatar CoreX raised prices on current and next-generation AI chips by 20% to 50% as memory costs complicated production ramps.

How far behind is CXMT?

In testing, CXMT's HBM3E performed closer to SK Hynix's previous-generation HBM3 than to the Korean company's HBM3E, one source said. High-bandwidth memory is made by vertically stacking memory chips so they exchange data rapidly with AI processors.

The market CXMT is entering remains tightly held by three incumbents. According to Counterpoint Research, SK Hynix held 50% of global HBM revenue in the second quarter, Samsung Electronics held 33% and Micron Technology held 18%, with most revenue coming from HBM3E.

CXMT held a 10% share of global DRAM revenue in the same quarter, ranking as the world's fourth-largest supplier of conventional memory. US export controls, however, limit its access to some of the most advanced chipmaking equipment, making it harder to close the gap with global rivals.

Samsung, for its part, said in July that it had expanded HBM4 sales and shipped HBM4E samples to major customers — leaving CXMT at least one generation behind in commercial HBM production.

A 20% yield rate buys China something US curbs cannot easily cut off.