Chip ETF Slips 4% as Hot Inflation Data and CoreWeave Debt Worries Overshadow TSMC's Record Quarter

The iShares MSCI Global Semiconductors UCITS ETF USD Acc closed Friday's session down 4.0% at EUR 16.53, capping a punishing stretch for semiconductor equities that has seen the Philadelphia Semiconductor Index (SOX) fall for eight consecutive sessions — its longest losing streak since 2008.

The sell-off has been broad. Since its peak on October 6, the Philadelphia index has shed roughly 16% of its value, and Bloomberg estimates the chip sector has lost about two trillion US dollars in market capitalization over the run. Yet the retreat stands in stark contrast to the operating performance of the industry's biggest players.

Record Results Meet a Wall of Skepticism

Taiwan Semiconductor Manufacturing Company delivered third-quarter numbers on Thursday that would normally galvanize the sector: a net profit of NT$763.06 billion, up 69% year over year, alongside record quarterly revenue of USD 46.72 billion. Management guided fourth-quarter revenue to a range of USD 52.3 billion to 54.3 billion, signaling continued confidence in demand.

Investors barely blinked. The gap between those fundamentals and the market's reaction illustrates how firmly attention has shifted to macroeconomic risks and the financing structure underpinning the artificial intelligence buildout.

Inflation Data Reframes the Rate Outlook

According to Reuters, Friday's rout was triggered in part by US inflation figures that came in hotter than expected, reviving expectations of further interest rate hikes — a development that weighs disproportionately on technology-heavy sectors. The yield on the ten-year US Treasury note has climbed above 5%, adding pressure to valuations across the board.

Those rate concerns compound a more specific anxiety: how the massive AI infrastructure buildout is being financed. Jefferies analysts have flagged growing funding risks in the global AI expansion. The strain is visible most clearly at CoreWeave, a specialist AI infrastructure provider whose bonds have dropped well below par while yields have climbed to nearly 15% — a signal that market watchers read as mounting financial stress in the sector.

The payback question looms large. Gartner estimates that AI infrastructure spending through 2030 could reach as much as USD 8.5 trillion, against projected revenues from AI services of only about USD 3.6 trillion.

A Chinese Memory Challenger Emerges

Competitive pressure added another layer of gloom. Reuters reported Tuesday on technological advances by China's ChangXin Memory Technologies (CXMT) in a new memory-cell architecture, intensifying fears of a rising Chinese rival and driving selling in US memory chip makers in particular.

Valuation Cushion Draws Attention

Despite the sharp pullback — which has pushed the fund's Relative Strength Index (RSI) down to 32.3 — some experts see the sector sitting at levels historically regarded as moderate. BofA analyst Vivek Arya noted that industry leaders including Nvidia, Broadcom and Micron now trade at roughly 13 times expected earnings, a range comparable to where companies like Cisco stood after the dotcom bubble burst.

Nvidia CEO Jensen Huang, speaking in Berlin, insisted the AI transformation is only just beginning. For now, investors are looking past that long-term pitch toward October 28, when Alphabet, Meta and Microsoft — three of the world's largest AI investors — report quarterly results. Even after this week's losses, the ETF remains up 73% year to date, leaving holders to weigh whether the chipmakers' strong order books can outlast the headwinds from rising rates and new competition.