Micron, SanDisk Shares May Be Overreacting to China Memory Threat

An analyst at Lynx Equity Research thinks Micron Technology (NASDAQ: MU) and SanDisk (NASDAQ: SNDK) shares fell too far in pre-market trading after reports that Apple may be allowed to source DRAM from China's CXMT.

The stocks dropped 3% and 5%, respectively, but KC Rajkumar of Lynx Equity Research believes the reaction is overblown. He argues that supply constraints and qualification gaps make it unlikely for Chinese memory suppliers to have a significant impact on Apple's sourcing strategy.

Rajkumar found that CXMT has been qualified only for one low-volume Mac SKU and not for iPhones, and its poor yield on lpDDR5x makes it incapable of supplying Apple at scale. Similarly, YMTC has not been qualified by Apple and has allocated its latest-generation NAND for domestic consumption.

The policy backdrop has been whipsawing memory stocks in recent weeks, with Commerce Secretary Howard Lutnick stating that Washington opposes the arrangement on August 17. The outcome of President Xi Jinping's planned U.S. visit will be a key catalyst for memory stocks in the coming weeks.