The iShares MSCI Global Semiconductors UCITS ETF took another battering on Tuesday, slumping roughly 7% to €17.01, as a second wave of selling swept through the chip sector. The fund, which had already seen a historic rout on Friday, now sits about 13.5% below its 52-week high of €19.66 reached on June 3 — though it remains up 72% year-to-date.
Broadcom’s Tepid Forecast Sparks Selloff
The catalyst for the latest leg lower was a disappointing outlook from Broadcom. The company beat expectations for its fiscal second quarter but guided for just $16 billion in AI-chip revenue in Q3, well shy of the $17.2 billion analysts had penciled in. The annual forecast for AI semiconductors was left unchanged, offering no upside catalyst.
That miss triggered a brutal chain reaction. On Friday alone, the semiconductor sector saw more than $1 trillion in market value evaporate, with some estimates putting the figure as high as $1.3 trillion. The Philadelphia Semiconductor Index crashed 10.3% — its steepest single-day decline since 2020. ASML dropped 3.8% and Infineon slid over 6% in early European trading.
Individual names fared even worse. Micron Technology collapsed 17% over two trading sessions. AMD lost 12.6% since the selloff began, including a 9% tumble on Tuesday that pushed its stock near $446. Intel, which had rallied roughly 10% on Monday as markets attempted a recovery, reversed course and fell 8% on Tuesday to around $101.50.
Macro Headwinds Compound the Pain
Stubbornly strong US economic data added to the pressure. The May jobs report showed 172,000 new positions, well above expectations, pushing the 10-year Treasury yield above 4.5%. That dashed hopes for an imminent Federal Reserve rate cut — a direct negative for richly valued growth stocks like chipmakers.
The macro backdrop exacerbated a sector already primed for profit-taking. The semiconductor trade had become overcrowded, with momentum strategies piling in. When the first cracks appeared, the unwinding was brutal. The ETF’s annualized 30-day volatility now stands at 54.87%, a stark reminder of the sector’s structural swings.
Asian Exposure Amplifies Losses
The selloff rippled through Asian markets with equal force. South Korea’s Kospi index tumbled 5.54% on Friday, while Samsung Electronics fell 6.4% and SK Hynix dropped nearly 10%. Both are significant holdings in the globally diversified ETF, which spans 23 developed and 24 emerging markets.
Additional headwinds came from reports of a potential strike at Samsung and a stake sale by TSMC, further souring sentiment. The fund’s international footprint, usually a diversifier, became a transmission belt for losses across regions.
Technical Rebound Offers Little Comfort
Markets attempted to stabilise on Monday. The Nasdaq Composite recouped about 0.9%, and Intel and Micron both surged roughly 10% in that session. But the renewed selling on Tuesday tested investors’ conviction once again.
The rapid turnaround from Friday’s rout suggests a technical correction rather than a structural break, according to some observers. The easing of geopolitical tensions — Iran’s military declared its recent attacks on Israel over — provided a temporary tailwind for risk assets.
Nonetheless, capital continues to rotate out of AI and semiconductor names into non-tech sectors. Whether this is a genuine rotation or a temporary setback will depend on the upcoming quarterly forecasts from major chipmakers, with Nvidia’s results expected in late June set to be the next key test.
Long-Term Demand Story Remains Intact
Despite the turbulence, the fundamental demand backdrop for semiconductors remains robust. Deloitte projects global chip sales of $975 billion in 2026, with nearly half coming from AI chips. So long as massive infrastructure investments continue to flow, the secular growth trend for the sector — and the ETFs that track it — is likely to hold.
For now, the iShares MSCI Global Semiconductors ETF, with nearly €4.8 billion in assets under management, is navigating one of its most volatile periods since the pandemic. The next move will hinge on whether the selloff was a violent but healthy correction in a bull market — or the beginning of something more ominous.
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