Micron Technology shares dropped sharply by 8.4% in late trading Friday, as investors locked in gains following a strong weekly rally, while intensifying competition from Chinese memory chip manufacturers added downward pressure on the stock.

Earlier this week, Micron Technology had surged after Tesla (TSLA) CEO Elon Musk revealed during the automaker's second-quarter earnings call that the company had secured a large volume of memory chips from Micron Technology under favorable terms. However, those gains were erased as traders reassessed the outlook for the memory chip market.

Chinese memory producers continue to expand their market share, raising concerns about the competitive landscape for server memory in the future. Additionally, bearish analyst commentary has pointed to potential weakness in DRAM pricing as AI computing costs evolve.

Despite stronger-than-expected quarterly results from Intel (INTC), the broader semiconductor sector received limited support, indicating that earnings-related boosts remain confined to individual companies. Major stock indexes were largely flat, suggesting that Micron Technology's decline was driven by company-specific and industry factors rather than a broad market sell-off.

The stock's pullback comes after recent gains, though Wall Street analysts generally remain optimistic about the company's long-term prospects.