Elon Musk just figured out why chip stocks like Micron and Sandisk are being tapped following some surprising news out of China.

Hot chip stocks like Micron (UM) and Sandisk (SNDK) are going for the chin from the start this week.

Ask the world’s richest person, Elon Musk, and he’ll probably tell you the selloff is just beginning.

“When China succeeds in manufacturing a product, its ability to scale is often greater than the rest of the world combined. We’ve seen this with lithium batteries and solar power, for example,” Musk said in a statement. new post on.

Musk was responding to an article about the new chip stock sell-off, fueled by Chinese tech player CXMT. The company’s president, Cao Kanyu, called it “key progress” on a new cellular architecture at an event in Shanghai over the weekend.

CXMT plans to roll out new memory products based on this architecture by the end of the year.

The development has raised concerns that growing Chinese competition could threaten the pricing power of memory chips, forcing investors to unwind momentum trades in AI.

Micron lost 3.8% during Monday’s trading session and is still down 2.5% in pre-market trading today. Sandisk lost 5.9% on Monday and is down 2.7% today.

Strong sales are also seen in other memory names, including SK Hynix (SKHY), Western Digital (WDC) and Seagate (STX).

Musk added: “SpaceX is a rare counterexample, where its mass in orbit is roughly an order of magnitude greater than the rest of the world, BUT China now puts the majority of non-SpaceX mass into orbit. SpaceX is an anomaly in the matrix. Maybe RAM will be different, but RAM was a low-margin product only about 3 years ago. LP5 and LP6 are designed to a common standard that China seems to be solving quickly.”

Brian Sozzi is the editor-in-chief of Yahoo Finance, host of the Sozzi unleashed morning show, the ‘Powerful actors with Brian Sozzi podcast and member of the Yahoo Finance editorial leadership team. Follow Sozzi on @BrianSozzi, InstagramAnd LinkedIn. Any advice on stories? Email brian.sozzi@yahoofinance.com.

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