Micron shares were down 4.4% at $873.70 in premarket trading. A slide that began at the start of the week on news that China's CXMT was developing a new memory chip has been compounded by fears about the wider AI trade.

South Korean memory companies Samsung Electronics and SK Hynix were even harder hit, dropping 9.5% and 11%, respectively, in local trading on Thursday.

But the worries are overblown, according to UBS analyst Nicolas Gaudois. He notes that CXMT's so-called 4F square design (4F2) is likely still just a sample product this year and it would take substantial development to maximize efficiency and performance.

"Memory stocks are now down 19% from the more recent peak in September, almost back to the July trough. We think this should push memory companies to get going on shareholder returns," Gaudois wrote in a research note Thursday.

Micron is currently restricted from carrying out big share buybacks or special dividends due to conditions of the Chips Act funding it received from the U.S. government back in 2024. But that limit should be lifted from Dec. 9 and the company recently approved an increase in its total share-repurchase authorization to more than $35 billion.

The long-term concern is that rising Chinese supply will undercut the skyhigh prices Micron and its peers can currently charge for memory. But even if CXMT can bring advanced chips to the market, it's unclear whether U.S. manufacturers would get government approval to buy CXMT-produced memory and, in any case, the Chinese company gives priority to domestic companies.