As China grapples with supply chain challenges in high bandwidth memory (HBM) semiconductors due to U.S. sanctions, its 'AI rise' is hindered. It has been confirmed that Changxin Memory Technologies (CXMT) has resumed its large-scale capital investments that had once paused. CXMT is reported to be introducing a significant number of new equipment to expand its production capacity for the latest DDR5 DRAM and its development of HBM3 (4th generation HBM).
According to industry sources on the 14th, CXMT has commenced equipment orders in the third quarter of this year. CXMT plans to establish a production line at its manufacturing base in Hefei, Anhui Province, and introduce the equipment. Initially, CXMT had communicated to equipment suppliers its intention to significantly expand production capacity by ordering new equipment from the start of the year; however, the introduction of new equipment was delayed due to the suspension of DDR4 production and possible U.S. regulations. CXMT's HBM production capacity is analyzed to reach around 50,000 wafers per month by next year. This is about 20% to 25% of the expected HBM production capacity for Samsung Electronics and SK hynix. CXMT held a 6% market share in the global DRAM market in the first quarter.
China is accelerating its drive for technological self-sufficiency as it faces difficulties in obtaining AI semiconductors like those from NVIDIA and AMD due to U.S. semiconductor regulations. The problem lies in the U.S. government's restrictions on HBM, an essential component of AI semiconductors. HBM facilitates the smooth supply of data to the graphics processing unit (GPU), which serves as the brain responsible for computation in AI semiconductors. The Financial Times reported on the 9th (local time) that "Vice Premier He Lifeng conveyed a request during trade negotiations with U.S. Treasury Secretary Scott Bessent to ease restrictions on HBM exports."
Meanwhile, to achieve HBM localization, CXMT, a major representative memory semiconductor corporation in China, has rolled up its sleeves. CXMT has completed the development of HBM2 (1st generation HBM) and is ramping up production of HBM3 (4th generation HBM). To this end, it has initiated significant capital investments since last year. CXMT is focused on upgrading its existing equipment that was used for DDR4 production to be utilized in the DDR5 production line. Reports indicate that the U.S. is considering including CXMT on its export control blacklist, which has delayed the introduction of foreign equipment.
However, as the shortage of HBM in China intensifies, it appears that they cannot afford to delay development and are hastening the introduction of new equipment. The Hong Kong South China Morning Post noted, "The shortage of HBM could hinder AI technological competitiveness," pointing out that while the two leading memory corporations in China, CXMT and YMTC, are advancing, their production capacity and technical sophistication still lag behind that of Korean corporations.
Analyses suggest that it will be difficult for China to influence the HBM market in the short term. The HBM being developed by China is not only an older model, but the stacked DRAM is also said to lag behind the 10-nanometer (1a, 14㎚ level) products mass-produced by domestic companies 2 to 3 years ago. Samsung Electronics and SK hynix use advanced 10-nanometer (1b, 11-12㎚ level) 5th generation DRAM to produce HBM.
Park Yoo-ak, a researcher at Kiwoom Securities, said, "The commercialization and market entry of CXMT's HBM will take quite some time," analyzing that the impact on next year's HBM market conditions will be limited.