A broad selloff in semiconductor stocks accelerated this week, wiping out more than $1 trillion in combined market value as investors grow increasingly nervous about stretched valuations, rising interest rate pressure, and the enormous capital costs behind the artificial intelligence buildout.
The Philadelphia Semiconductor Index, a closely watched gauge of the sector, fell 3.1% on Wednesday and is now down roughly 10% over the past six trading sessions, putting it on pace for its longest losing streak since May 2025.
The selloff’s sharpest moves have come out of South Korea, where the Kospi index slumped 10.8% overnight as Samsung Electronics and SK Hynix tumbled 13.4% and 14.7% respectively, before the pressure spread through European markets and into US trading, dragging Micron and AMD down 10% to 11%.
Analysts point to three compounding factors behind the rout: reports of a breakthrough in Chinese chipmaking tools that could narrow the technology gap with established leaders, broker warnings that memory chip prices are now expected to peak in 2027 rather than continue climbing as previously assumed, and leveraged chip-focused ETFs that may be mechanically amplifying price swings in both directions.
The scale and speed of the decline underscore how tightly wound expectations around AI-driven chip demand had become after a prolonged rally, with investors now reassessing how much further valuations in the sector can stretch before growth assumptions catch up with reality.
