With data-driven analytics becoming mainstream, the global demand for dedicated AI and Deep Learning accelerator chips is soaring. These accelerators, designed with densely packed Processing Elements (PE), are especially vulnerable to the manufacturing defects and functional faults common in the advanced semiconductor process nodes resulting in significant yield loss. In this work, we demonstrate an application-driven methodology to reduce the yield loss of AI accelerators by correlating the circuit faults in the PEs of the accelerator with the desired accuracy of the AI workload execution. We exploit the error-healing properties of backpropagation during training, and the inherent fault tolerance features of trained deep learning models during inference to develop the presented yield loss reduction and test methodology. An analytical relationship is derived between fault location, fault rate, and the AI task's accuracy for deciding if the accelerator chip can pass the final yield test. An yield-loss reduction aware fault isolation, ATPG, and test flow are presented for the multiply and accumulate units of the PEs. Results obtained with widely used AI/deep learning benchmarks demonstrate the efficacy of the proposed approach in the reduction of yield loss of AI accelerator designs while maintaining the desired accuracy of AI tasks.