Chip Stocks Tumble as Musk Cites China Supply Risks

Key points

• Micron Technology shares dropped 3.88% to $989.04, while Sandisk Corporation fell 5.97% to $1,487.33.
• The Roundhill Memory ETF (DRAM) declined 4.32%, and SK Hynix dropped 4.02%.
• Elon Musk attributed the decline to 'surprising news out of China' affecting chip stocks.
• This selloff follows a period of significant growth, with Sandisk up 644% in 2026 prior to this drop.
• The market reaction highlights ongoing concerns about supply chain stability despite strong AI-driven demand.

Background

In September 2026, Sandisk shares surged 644% as AI demand reshaped the NAND market, with analysts citing a shift from commodity storage to critical AI infrastructure. In early October, Elon Musk confirmed discussions with TSMC and Intel regarding the Terafab project, signaling confidence in advanced chip supply chains. However, the current decline suggests new concerns regarding Chinese supply chain dynamics.

Why it matters

The sudden drop in major memory chip stocks indicates that geopolitical and supply chain risks can rapidly override strong fundamental demand driven by AI. Investors are reassessing the stability of the semiconductor supply chain, particularly regarding China, which could impact future pricing and availability of critical components.

What to watch

Market participants will monitor further developments in China's semiconductor sector and any official responses from US chipmakers. Analysts may revise price targets and outlooks for Micron and Sandisk in light of the new supply chain concerns.