A brutal global selloff in semiconductor stocks deepened through late July as investors questioned whether the AI infrastructure spending boom can sustain the valuations baked into chipmaker shares. The PHLX Semiconductor Index (SOX) briefly broke below 11,000 on July 28, down more than 25% from its June record high, putting it in correction territory.
South Korea’s Kospi index plunged 10.8% in a single session, briefly triggering a trading halt, as SK Hynix cratered 14.65% and Samsung Electronics fell more than 13%. Japan’s Tokyo Electron dropped over 10%, Advantest slid 8%, and Kioxia plunged 15%. The damage spread to US markets where the VanEck Semiconductor ETF (SMH) posted its worst monthly performance since 2008, down more than 19% in July. The Roundhill Memory ETF (DRAM) fell roughly 11% on July 28 alone and is now down over 40% from its June high.
Micron Technology has shed over $450B in market value since its June peak. Sandisk has been more than cut in half from its late-June high. SK Hynix fell below its $149 IPO price from its blockbuster Nasdaq debut just weeks earlier, touching an all-time low in US trading.
Analysts attributed the rout to a confluence of fears: doubts about returns on the $650B in hyperscaler AI capital expenditure, China’s accelerating chip development progress, and the Federal Reserve’s hawkish posture ahead of its July rate decision. Yet some viewed the selloff as a mid-cycle reset. Morgan Stanley called it a correction rather than a structural top, noting that HBM memory supply remains sold out through 2027. Nvidia, notably, turned positive on July 28 while the rest of the sector bled red, highlighting the divergence between AI leaders and the broader chip market.
