Micron, SanDisk Stocks Down Amid Apple Sourcing Rumors

Micron Technology (MU) and SanDisk (SNDK) stocks took a hit in pre-market trading Monday after reports emerged that the Trump administration may allow Apple to source DRAM from China's CXMT and NAND flash from YMTC.

However, analyst KC Rajkumar of Lynx Equity Research believes the selloff is an overreaction. According to Rajkumar, supply constraints and qualification gaps make the China memory threat to Apple far smaller than the headlines imply.

CXMT has been qualified for only one low-volume Mac SKU, but not for iPhones at all. Moreover, its poor yield on lpDDR5x makes it structurally incapable of supplying Apple at any meaningful scale. Similarly, YMTC's NAND is not qualified for any of Apple's products, and the company has allocated its latest-generation NAND for domestic consumption.

Rajkumar argues that even if a formal policy green light were issued, CXMT supply would unlikely dent the shortage Apple faces in DRAM, nor could it improve Apple's negotiation position at traditional suppliers such as MU. The near-term catalyst for memory stocks is the timing and outcome of President Xi Jinping's U.S. visit on or around September 24.