Uh-oh. It’s starting again. Competition from China on computer memory sales is roiling stock markets, and once again, Sandisk (NASDAQ:SNDK) stock looks caught in the turmoil.
Last time this happened, in July, it cost Sandisk stock a near-50% decline in a month. Should investors expect a repeat of July’s troubles?
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Well, Sandisk stock shed 6% on Monday, and as markets reopen Tuesday, Sandisk stock is falling another 3.5% as of 11 a.m. ET.
Image source: The Motley Fool.
CXMT in the news
Blame Chinese DRAM company ChangXin Memory Technologies, CXMT. CXMT went public in July with a $487 billion market capitalization and a promise to expand DRAM production and steal market share from Western computer memory makers. In a supply-constrained market, even Apple was looking to buy memory chips from CXMT!
That plan fell apart after Apple discovered CXMT wanted it to pay the same (or worse) prices for DRAM as SK Hynix and Samsung were charging. And seeing as CXMT’s chips were “two or three generations” behind current DRAM technology, Apple declined.
But now, CXMT is making a move to improve its technology. The company’s new “4F square” stacked DRAM architecture promises to increase the storage density of its chips and make the product more competitive with Micron’s, SK’s, and Samsung’s wares. CXMT hopes to use the new technology to begin producing high-bandwidth memory (HBM) later this year.
Should Sandisk investors worry?
Memory supply remains in deficit and may get even tighter next year. So long as CXMT’s chips primarily supply the low end of the mobile phone market, rather than AI data centers, Sandisk’s high-margin AI sales should be safe. Moreover, CXMT isn’t (yet) producing NAND chips, which are Sandisk’s specialty.
Although both companies target HBM, they’re approaching from different directions. I see greater risk to Micron stock than to Sandisk.
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