Semiconductor stocks have suffered their worst stretch in roughly two decades, with the Philadelphia Semiconductor Index, known as the SOX, falling more than 7% in a single session last week and more than 12% over the course of the week, its longest losing streak since 2006.
Intel led the declines, plunging more than 28% after the company gave investors a weaker than expected earnings outlook. Other major chipmakers fell sharply too: AMD dropped roughly 10%, Qualcomm fell more than 11%, and equipment makers including Applied Materials, Lam Research and ASML all declined as well. According to data compiled by S3 Partners and reported by Bloomberg, short sellers who had bet against the sector realized roughly $32 billion in paper profits over the week.
The sell-off had ripple effects overseas. In South Korea, the KOSPI index opened lower Monday as Samsung Electronics and SK Hynix shares fell on the back of Intel's drop, though both stocks pared some losses as the session went on. Taiwan Semiconductor Manufacturing Company also declined. The moves reflect how tightly linked global chip supply chains and investor sentiment have become, with weakness in one major U.S. company rippling through Asian markets within hours.
Analysts pointed to a mix of causes: chip stocks had rallied sharply for much of the year on enthusiasm for artificial intelligence spending, leaving valuations stretched and some technical indicators in territory associated with overheated markets even before last week's declines. The sell-off also landed in the same week the Federal Reserve held interest rates steady, and just days before the U.S. midterm elections, adding to a generally cautious mood among investors.
Apple is scheduled to report its fiscal fourth-quarter results after Monday's market close, a report investors will watch closely for any read-through on broader demand for chips and consumer technology.
Why did Intel fall so much?
Intel shares plunged more than 28% after the company issued a weaker than expected earnings outlook.
Is this just a U.S. story?
No. The decline spread to Asian markets, pulling down South Korea's KOSPI and shares of Samsung Electronics, SK Hynix and Taiwan's TSMC.