SanDisk plunges 10% as memory selloff deepens across chip sector

Memory stocks are bleeding. SanDisk lost 10 percent on Wednesday, dragging SK Hynix, Micron, and the broader semiconductor sector into a second week of losses.

The selloff erased more than $23 billion from SanDisk's market value and pushed the iShares Semiconductor ETF lower, as investors rotated out of AI-memory proxies into large-cap technology platforms including Amazon, Alphabet and Apple.

"Technology investors may have already priced in years of growth," David Russell, global head of market strategy at TradeStation, said. "That does not mean demand has suddenly collapsed, but it helps explain why even strong earnings expectations are no longer enough to prevent violent profit-taking."

The rout extended across the memory complex. SK Hynix shares fell as much as 11 percent in Seoul before recovering some losses, while Micron Technology lost 8 percent and Seagate gave back 6 percent. AMD and Intel each dropped about 4 percent. The declines followed a 7.3 percent drop in South Korea's Kospi index and the country's first interest-rate increase in more than three years, compounding pressure on leveraged retail positions tied to single-stock ETFs.

At the center of the debate is whether the memory industry's structural shift toward high-bandwidth memory has truly broken the boom-bust cycle — or merely delayed it. HBM chips, essential to Nvidia's AI accelerators, are more complex to manufacture and consume greater production capacity, making supply difficult to expand quickly. But new factories and packaging facilities being built today could begin easing constraints by 2027 and 2028, threatening to reintroduce the industry's old problem of capacity arriving after prices have peaked.

HBM Bulls Say This Cycle Is Different

The bullish argument rests on three structural changes. HBM chips require advanced packaging techniques such as CoWoS (chip-on-wafer-on-substrate) that limit how fast supply can scale. SK Hynix holds more than half of the HBM market, giving it pricing power that commodity DRAM producers lacked in previous cycles. And three- to five-year supply agreements with hyperscalers provide earnings visibility that the industry has never had before.

Barclays analyst Simon Coles initiated coverage of SK Hynix's Nasdaq-listed ADRs with an Overweight rating and a $330 target, forecasting the memory shortage to intensify in 2027 with only limited improvement during 2028. IBK Securities analyst Kim Woon-ho raised his target on the Korean shares to 4 million won, predicting an 11th consecutive quarterly earnings surprise as demand spills over from HBM into conventional DRAM and NAND storage. Hanwha Investment & Securities has an even higher target of 4.3 million won.

The Bust May Be Delayed, Not Defeated

BNK Investment & Securities analyst Lee Min-hee represents the skeptical end of the debate. Lee has a Hold rating and a 1.85 million won target on SK Hynix, acknowledging firm AI-server demand while warning that the momentum behind hyperscaler infrastructure investment could slow. If financing costs rise or AI products fail to generate sufficient returns, cloud companies may delay projects even while remaining committed to the technology.

New production capacity presents the longer-term risk. Factories and packaging facilities being built to address today's shortage could begin easing supply constraints in 2027 and 2028, reviving the industry's old pattern: capacity arrives after prices and profits have already encouraged customers and manufacturers to change their behavior.

For investors, the selloff creates a divergence between near-term positioning risk and the structural HBM thesis. SK Hynix's Seoul shares had more than tripled before the latest turbulence, and its Nasdaq listing introduced a second investor base with options and leveraged exchange-traded products that can magnify moves in both directions. Micron, trading at a discount to SK Hynix on forward earnings, offers a secondary bet on the same AI-memory demand thesis. The trigger for a reversal is the next earnings report that confirms continued HBM tightness and spillover into DRAM and NAND. The risk is that hyperscalers delay AI infrastructure spending enough to cut HBM orders, turning the "shortage into 2027" narrative into a demand slowdown.

This article is for informational purposes only and does not constitute investment advice.