VanEck Chip ETF Retreats From Record as Investor Anxiety and Legal Headwinds Temper the AI Rally

VanEck Semiconductor ETF drops 4% from record high amid memory chip rout; Micron and SanDisk plunge. Despite lawsuit and Burry shorts, long-term fundamentals remain strong with AI demand.

The VanEck Semiconductor UCITS ETF slammed into reverse on Wednesday, shedding four percent to close at €105.18 — a sharp comedown from the fresh 52-week high of €111.18 it had set just a day earlier. The pullback cut a slice out of what had been a breathtaking run: year-to-date gains, which stood at nearly 100 percent before the sell-off, now sit at 91.38 percent. Even after the drubbing, the fund’s 12-month advance of 166 percent and its 13.63 percent premium above the 50-day moving average of €92.56 leave little doubt that the longer-term trend remains firmly intact.

The selling was concentrated among memory chip makers, a segment that had become the speculative darling of the AI boom. Micron Technology cratered more than eight percent on the day, while SanDisk plunged ten percent. The larger names in the sector also felt the heat: Nvidia fell three percent and AMD dropped five percent. The rout followed a second quarter in which the Philadelphia Semiconductor Index (SOX) surged roughly 88 percent — its best quarterly performance since 1994 — and that very speed has made institutional investors jittery. Bank of America’s proprietary bubble-risk indicator for semiconductors recently climbed to 0.91, a reading that historically precedes sharper corrections.

Compounding the unease, a class-action lawsuit emerged on Wednesday accusing Micron, Samsung and SK Hynix of colluding to artificially inflate DRAM prices. Reports indicate that DRAM prices have risen by approximately 700 percent over the past four years. The legal cloud arrived alongside a high-profile bearish bet: Michael Burry of “The Big Short” fame disclosed new short positions against Nvidia, Applied Materials, and put options on semiconductor ETFs, according to filings dated June 30. Burry pointed to the historically extended period during which the chip index has traded above its 200-day moving average as a reason for caution.

Yet the fundamental picture remains robust. Micron reported third-quarter revenue of $41.5 billion, four times the year-ago figure, driven by insatiable demand for high-bandwidth memory used in AI data centers. The company also locked in long-term contracts worth at least $100 billion. AMD, meanwhile, closed its first quarter with $10.3 billion in sales, fueled by its Epyc processors and Instinct graphics chips, and analysts at Wells Fargo and Cantor Fitzgerald have set price targets up to $700. Nomura’s strategists expect the semiconductor supercycle to persist into 2027, underpinned by a forecast 78 percent jump in AI server installations this year. One bottleneck remains: wafer-on-substrate packaging production is stuck at 1.8 million units per quarter, below the 2 million needed to meet peak demand.

The broader market backdrop supports the bull case. Global semiconductor sales hit roughly $110 billion in April 2026, nearly double the prior year’s level, and industry groups project full-year revenue of $1.5 trillion — with Deloitte estimating about $500 billion of that coming from AI chips alone. The VanEck ETF, which caps individual holdings at ten percent and counts AMD, Micron and TSMC among its top weights, has attracted assets under management of more than €8 billion. Its annual expense ratio stands at 0.35 percent, and it reinvests dividends rather than distributing them, adding to the compounding effect.

Technically, the fund now sits 5.40 percent below its all-time high, with a 30-day annualized volatility of 57.64 percent. The dispersion between individual holdings is unusually wide, and the VIX is rising — both signals that the chip sector is likely to remain a turbulent trade in the second half of the year. Key catalysts loom: TSMC reports second-quarter results on July 16, followed by AMD’s quarterly update in August. If the heavyweights deliver another round of blistering earnings growth, the rally could regain its footing. If not, the correction may have further to run.