Although China-based CXMT is reportedly mass producing HBM2 memory, Chinese high-tech giants like Baidu, Huawei, and Tencent are stockpiling high-bandwidth memory from Samsung as they expect the new U.S. export rules to restrict sales of HBM to Chinese entities, reports Reuters. Both Baidu and Huawei need HBM2E memory for their AI processors.
Now that it has become increasingly complex for Baidu and Huawei to obtain advanced AI processors, such as Nvidia's H100 or Intel's Gaudi, both companies have to rely on their own AI processors allegedly made by SMIC. However, they still need to get HBM2 memory for their processors, and it will take a while before they can validate memory from CXMT. So, for now, they will keep relying on Samsung's memory. In the first half of 2024, Chinese companies contributed to around 30% of Samsung's HBM revenue, according to Reuters.
The U.S. is expected to introduce an export control package to restrict China's access to advanced AI processors. In this case, America is projected to ban sales of HBM memory to Chinese entities, which will limit Baidu's and Huawei's ability to build AI processors in sufficient quantities. The specific details of these restrictions remain unclear, though. The U.S. Department of Commerce did not comment. Still, it stated last week that they are constantly evaluating the changing threat landscape and revising export controls to safeguard U.S. national security and protect the country's technological ecosystem.
Chinese companies like Baidu, Huawei, and Tencent use Samsung's HBM2E chips with their processors, such as Huawei's Ascend 910 series. However, China's CXMT is still lagging and can only produce HBM2. Also, such memory has to be validated with actual processors before it is used for high-volume products.
The potential U.S. restrictions could significantly impact Samsung, which has a larger market share in China than its competitors. Micron has already stopped selling HBM products to China. SK Hynix focuses on producing more advanced HBM3 and HBM3E modules for customers like Nvidia, which means a shift in market focus away from China.
The global AI boom has created a high demand for advanced HBM chips, leading to supply constraints. Micron, Samsung, and SK Hynix are expanding their production capacity for HBM3E devices, which are already sold out for the current year and nearly sold out for most of 2025.
