Shares of major memory chip manufacturers fell sharply this week following two significant developments in the semiconductor industry. First, SanDisk (NASDAQ: SNDK) announced a major $1 billion strategic investment in Taiwan's Nanya Technology to secure long-term DRAM supply, a move that initially pressured its stock by around 3.5%. The deal involves SanDisk acquiring approximately 138.685 million shares at NT$223.9 each, securing a 3.9% equity stake, and includes a long-term DRAM supply contract aimed at meeting rising AI-driven demand.
Simultaneously, a broader sell-off hit the sector after Google researchers unveiled a new AI memory compression algorithm called TurboQuant. The technology, which can reduce AI memory requirements by up to six times, raised investor concerns about potential long-term demand for advanced memory chips. In response, Samsung shares dropped 4.8% and SK Hynix fell 6.23% on the Korea Exchange, dragging down the broader KOSPI index. U.S. memory stocks including Micron, SanDisk, and Western Digital also fell between 1.6% and 3.5%.
Analysts were quick to push back on the bearish sentiment, characterizing the sell-off as short-term profit-taking rather than a fundamental shift. Surim Lee of DS Investment & Securities argued that efficiency technologies like TurboQuant tend to expand total demand by alleviating bottlenecks and lowering costs, which in turn fuels higher usage. Han Ji-young of Kiwoom Securities suggested the drop reflected investor fatigue after a strong early-year rally, with the Google news serving as a catalyst to lock in gains.
The SanDisk-Nanya deal underscores a broader industry trend toward securing multi-year supply agreements and capacity lock-ins, especially for DRAM critical to AI infrastructure. Despite the immediate market reaction, the long-term strategic positioning for AI-driven demand remains a key focus for semiconductor companies.
