Chinese Chipmakers Make Strides in HBM Semiconductors, Decreasing Reliance on Foreign Suppliers

Chinese Chipmakers Make Strides in HBM Semiconductors, Decreasing Reliance on Foreign Suppliers

In a significant development, two Chinese chipmakers are making headway in the production of high-bandwidth memory (HBM) semiconductors used in AI chipsets. This progress in HBM, even in older versions, marks a significant step forward for China’s efforts to reduce reliance on foreign suppliers amid tensions with the US. The restrictions on US exports of advanced chipsets to Chinese firms have prompted China to seek alternatives.

CXMT, China’s leading DRAM chip manufacturer, has partnered with Tongfu Microelectronics to develop sample HBM chips. These chips are currently being showcased to potential clients. Tongfu Microelectronics' shares have surged by 8% following this news. Another example is Wuhan Xinxin, which is constructing a factory that will produce 3,000 12-inch HBM wafers per month.

Chinese chip firms, including CXMT, have been engaging with South Korean and Japanese semiconductor equipment companies to acquire tools for HBM development. These efforts highlight China’s commitment to enhancing its chip sector, as it actively collaborates with international partners.

Wuhan Xinxin and CXMT are both private companies that have received funding from local governments for technological advancements. The Chinese government’s support for these companies demonstrates its dedication to bolstering the country’s chip industry. Huawei, the tech giant subject to US sanctions, is also aiming to produce HBM2 chips in collaboration with domestic companies by 2026.

HBM, a type of DRAM standard first introduced in 2013, involves vertically stacking chips to save space and reduce power consumption. It is particularly well-suited for handling the massive amounts of data generated by complex AI applications. The market for HBM is currently dominated by South Korea’s SK Hynix, Samsung, and US-based Micron Technology. These companies manufacture the latest HBM3 chips while working on the development of the fifth-generation HBM, HBM3E.

China’s current focus is on HBM2, as HBM3 chips are made using American technology that Chinese firms, including Huawei, are restricted from accessing due to export controls. However, Chinese chipmakers still have a long way to go to catch up with their global rivals in HBM technology. According to Nori Chiou, an investment director at White Oak Capital, Chinese chipmakers lag their Korean counterparts by a decade in HBM technology.

Nevertheless, collaborations such as the one between CXMT and Tongfu present significant opportunities for China to advance its capabilities in memory and advanced packaging technologies within the HBM market. Patents filed by CXMT, Tongfu, and Huawei demonstrate China’s long-standing plans to develop HBM domestically, dating back at least three years. The increasing US export controls imposed on China’s chip industry have only fueled China’s determination to become self-sufficient in HBM technology.

As China continues to invest in its chip sector and forge partnerships with international players, it is clear that the country is making strides in reducing its reliance on foreign suppliers. This progress in HBM technology holds promise for China’s ambitions in AI and the semiconductor industry as a whole.