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China Is So Desperate for AI Memory That It’s Producing Chips With a 70% Failure Rate

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China Is So Desperate for AI Memory That It’s Producing Chips With a 70% Failure Rate

So much so that the country’s largest maker of dynamic random-access memory (DRAM) is pushing ahead with plans to produce advanced memory chips despite extremely low manufacturing yields.

Reuters reports, citing unnamed sources, that ChangXin Memory Technologies (CXMT) plans to begin limited production of HBM3E chips within the next two months.

HBM3E is an advanced type of high-bandwidth memory (HBM) used alongside AI processors. The technology stacks memory chips vertically, allowing them to transfer large amounts of data at high speeds. But these chips are difficult and expensive to manufacture.

CXMT has already sent samples to several Chinese AI chip designers, according to Reuters. However, only about 20% to 30% of the chips it produces meet specifications and are usable.

By comparison, South Korea’s SK Hynix, the global HBM market leader, reportedly has yields of around 70%. That means CXMT must discard or rework most of the chips it produces, driving up manufacturing costs and limiting supply.

And CXMT is still behind its foreign rivals in performance. Its HBM3E chips reportedly perform closer to SK Hynix’s older HBM3 chips than its HBM3E products. Meanwhile, Samsung has already expanded sales of its more advanced HBM4 chips and shipped samples of its next-generation HBM4E chips.

These memory chips are critical to the powerful AI processors used to train and run advanced AI models.

The AI boom has sent demand for memory soaring as tech companies pour billions into new data centers. Tom’s Hardware reported earlier this year that huge data center projects like OpenAI’s Stargate are calling for hundreds of thousands more DRAM wafers per month, amounting to roughly 40% of global DRAM output.


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