Introduction
Changxin Memory Technologies (CXMT) recently claimed it reached an 80% yield rate in DDR5 memory production. This claim has raised doubts. South Korean media outlets, such as Businesskorea, dispute the numbers. They suggest CXMT’s DDR5 yield rate is much lower, perhaps between 10% and 20%.
DDR5, introduced by SK Hynix in 2020, offers four times the data capacity and double the processing speed of its predecessor, DDR4. It is widely used in desktops and large-scale servers and is considered a high-value product alongside high-bandwidth memory (HBM) in the AI era.
The controversy surrounding CXMT’s yield claims highlights the competitive landscape of the global memory market, where companies are constantly striving to improve their production capabilities and gain a competitive edge.
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Key Takeaways:
- CXMT’s claim of an 80% DDR5 yield is disputed by South Korean media, which suggests the true figure is closer to 10-20%.
- Lack of EUV lithography tools limits China’s ability to produce high-quality DRAM chips.
- Geopolitical tensions may worsen challenges for China’s semiconductor industry, especially under a potential Trump administration.
- Chinese memory companies like CXMT are working to improve DDR5 production but face technological gaps.
- South Korean firms like Samsung are advised to focus on new technologies like HBM to maintain their lead.
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Background: The Rise of DDR5 and CXMT’s Ambitious Claims
DDR5 is the newest generation of DRAM, used in devices like PCs, servers, and mobile phones. Manufacturers worldwide, including Samsung, SK Hynix, and Micron, are pushing to perfect DDR5 production. CXMT, China’s top DRAM manufacturer, has entered the market, hoping to compete with these global leaders.
In November 2023, CXMT began producing DDR5 chips, directly challenging Samsung and SK Hynix. DDR5 is a crucial component in modern computing, offering significant performance improvements over its predecessor, DDR4. Its widespread adoption in desktops, servers, and AI applications makes it a high-value product in the semiconductor market.
Recently, the company claimed to have reached an 80% yield rate in DDR5 production. Chinese media outlets like Zol.com.cn spread this news. However, South Korean experts like Businesskorea believe CXMT’s actual yield rate is much lower, closer to 10% to 20%.
While CXMT holds a 12% share of the global DRAM market by volume, its revenue share remains low, indicating challenges in selling its products.
Challenges in DRAM Production: Equipment Shortages and Technological Gaps
South Korean media outlets, such as BusinessKorea, argue that CXMT’s actual DDR5 yield rate is significantly lower than the 80% claimed by Chinese media. They suggest the true yield may be closer to 10-20%.
Here’s a breakdown of their arguments:
- Technological Limitations: South Korean media points to CXMT’s reliance on older manufacturing technology and limited access to advanced equipment due to US sanctions. This, they argue, hinders CXMT’s ability to achieve high yields and compete effectively with South Korean giants like Samsung and SK Hynix.
- Industry Sources: South Korean media cites industry sources and experts who dispute CXMT’s 80% yield claim, suggesting it’s an exaggeration.
- Focus on Market Share: South Korean media emphasizes that while CXMT may have a 12% share of the global DRAM market by volume, its revenue share remains low, indicating challenges in selling its products and achieving profitability.
Essentially, South Korean media casts doubt on CXMT’s 80% yield claim, suggesting it’s an attempt to inflate their capabilities and mislead the market. They highlight the technological and market-related challenges faced by CXMT, emphasizing the competitive advantage held by South Korean companies in the DRAM market.
ASML, a leading supplier of EUV equipment, demonstrated new tools in 2024. These tools could reduce manufacturing costs by up to 30%. However, due to export restrictions, CXMT cannot use these advanced tools. As a result, its DDR5 yield rate remains low, between 10% and 20%. This technological gap limits CXMT’s ability to compete with Samsung and SK Hynix.
Geopolitical Headwinds and Their Impact on China’s Semiconductor Industry
Geopolitical tensions are also a major factor in CXMT’s struggles. Under the Biden administration, China’s semiconductor companies faced some restrictions but were able to continue production.
However, experts predict the upcoming Trump administration will impose stricter export controls and tariffs. This could make it harder for CXMT to access the equipment and materials needed to improve its yield rates.
The United States and its allies continue to limit China’s access to critical technologies, especially in DRAM manufacturing.
These restrictions slow China’s progress and widen the gap with global leaders. Christopher Fokker, CEO of ASML, recently stated that China’s semiconductor technology lags 10-15 years behind in advanced sectors like DRAM production.
Without access to EUV tools and other cutting-edge technologies, China’s memory industry faces a long road ahead.
Domestic Chinese Memory Makers Begin To Embrace DDR5 Technology
Despite these challenges, China’s memory manufacturers are making progress. On December 17, 2024, KingBank and Gloway launched 32GB DDR5 modules for PCs and servers.
These modules were marketed as “China-made DDR5 chips,” though neither company directly named CXMT as the supplier. However, industry sources link these chips to CXMT.
This development signals that China is closing in on global leaders in DDR5 production. But the debate over CXMT’s yield rate remains unresolved.
While CXMT claims an 80% yield, reports suggest its actual yield is closer to 20%. The gap is attributed to outdated equipment and technological limitations.
A Divided Industry: Differing Views on China’s Progress
The conflicting views on CXMT’s progress reveal the complex nature of the global semiconductor market. China has made significant strides in semiconductor manufacturing but still faces major obstacles. These include access to advanced equipment and the ability to maintain high yields.
A source familiar with the industry noted that although Chinese facilities appear to use US-made equipment, many replacement parts are locally produced replicas. This further complicates the situation and raises concerns about the long-term sustainability of China’s DRAM industry.
As CXMT continues to promote its DDR5 chips, its claims of an 80% yield will likely remain under scrutiny. Meanwhile, South Korean companies like Samsung are focusing on new technologies, such as high-bandwidth memory (HBM), to stay ahead in the global memory market.
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Conclusion: What’s Next for CXMT and China’s DRAM Industry?
The controversy surrounding CXMT’s DDR5 yield claims highlights the challenges facing China’s semiconductor industry. Despite making progress, the country’s DRAM sector struggles with technological and geopolitical obstacles.
The lack of access to EUV equipment and ongoing export restrictions put China at a significant disadvantage compared to global leaders.
