I can't imagine Sandisk (or anyone else) be too happy that failed parts in the end did make it out of the factory, alone for the risk of someone applying a fake Sandisk label on a part that actually did come out of a Sandisk factory.
So that those chips aren't entirely wasted, all IC manufacturers bin where possible. If 2GB out of your 8GB flash chip are bad, you don't just eat that cost, you sell it as a 4GB chip.
Everyone does this all the time in every market segment. Silicon manufacturing is simply an imperfect process. The only logical thing to do is try to sell defect chips as a different product that works around the defects.
In general, it's called "China". Also happens with US companies like Micron - look up what Spectek does: https://www.micron.com/content/dam/micron/global/public/spec... (in particular, see the lines about "carcass die".)
I think in this case the microSD card had a defective controller or perhaps a bonding defect, so it would not have been usable as such, but the NAND was still good. This was caught post-assembly, and so got recycled into raw NAND. Sandisk gets to profit from it, so I think they're definitely happy about selling these.