Micron Stock Falls as Apple Taps China for Cheap Memory Chips

Micron Technology (NASDAQ: MU) stock plummeted 5.5% in early trading Monday after news broke that the Trump Administration has allowed Apple (NASDAQ: AAPL) to purchase memory chips from Chinese suppliers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp (YMTC).

The decision, reported by tech news site WCCTech, could potentially threaten Micron's market share in China, where the imported DRAM and NAND chips would be used. However, analysts point out that these Chinese-made memory chips would only be used in Apple products sold in China.

Lynx Equity Research analyst KC Rajkumar downplayed the threat to Micron stock, calling calls for investors to sell the company's shares an 'overreaction.' Rajkumar cited concerns about the quality of Chinese wares and the inability of CXMT and YMTC to scale production sufficiently to meet Apple's needs.

However, another analyst believes that these cheap Chinese chips are a growing threat. The Motley Fool notes that CXMT just raised $8.6 billion in a Shanghai IPO and plans to use this funding to ramp up production, while YMTC is expected to follow suit.