Chip ETF Slips 5% on Intel Shock, but Midterm Playbook Points to a 22% Rebound

The VanEck Semiconductor UCITS ETF closed Friday at €87.00, down 5.0% on the day, as a disappointing Intel outlook rippled across the entire chip complex. The sell-off has done little to dent a stellar year, however: the fund is still up 63% since January.

Intel's guidance for the fourth quarter landed well short of expectations. The company told the SEC it expects revenue of $15.0 billion to $16.0 billion, against an analyst consensus of $17.1 billion, and sees adjusted earnings per share of just $0.25. For the quarter just reported, Intel posted revenue of $16.5 billion and non-GAAP EPS of $0.52. Worse for the wider industry, the chipmaker warned that the current slowdown in the PC market could persist until at least the first half of 2027 — a signal investors read as a verdict on global chip demand rather than a company-specific problem.

The stock collapsed roughly 29% on Friday, its steepest one-day fall since the 1970s, and dragged the Philadelphia Semiconductor Index down 7.2%, according to Reuters.

A $5 Trillion Wipeout

The Intel shock landed on top of a correction that has been building since early October. Roughly $5 trillion in market value has evaporated from the global semiconductor sector over that stretch, according to media reports citing Yahoo Finance data, with 47 leading AI and chipmaking names bearing the brunt. Nvidia and Google parent Alphabet have each shed around $835 billion in market capitalization since October 6, even as other corners of the broad market managed gains over the same period.

Behind the slide lies a nagging question about the hyperscalers' spending. Microsoft and Amazon have both reaffirmed plans to keep pouring money into AI infrastructure, but critics point to increasingly negative free cash flows. Kiwoom analysts note that capex is currently growing faster than operating cash flow, muddying the picture on how quickly those billions will pay off.

Strategists Split on What Comes Next

Market watchers are divided. Bank of America's Michael Hartnett urges tactical caution, flagging the risk posed by 42 global rate hikes over the past six months; until central banks finish tightening, he argues, growth stocks face a difficult backdrop. Jeff Hirsch takes the other side, branding the weakness "Octoberphobia" and calling the sell-off a buying opportunity.

History offers support for the bulls, particularly with US midterm elections due Tuesday. Since 1950, the S&P 500 has risen in all 19 comparable stretches between the end of October in a midterm year and the following June. For semiconductor stocks the record is even cleaner: since 1994, the sector has gained in eight out of eight such windows, with a median advance of 22%.

Technical Lines and a Broadcom Bright Spot

Friday's rout pushed the ETF to within reach of closely watched technical levels, with market observers eyeing the psychologically important $520 mark on its US counterpart SMH and the 200-day moving average. The fund now sits 22% below its 52-week high.

Not every portfolio name was under pressure. DA Davidson upgraded Broadcom from Neutral to Buy and lifted its price target to $400 from $350 — a lone bright spot that failed to stem the broader decline.

Yuanta Securities, meanwhile, is holding firm on memory-chip producers despite the near-term volatility. The analysts expect a structural "super squeeze" in supply through 2028, as major tech companies have already locked up substantial production volumes for years ahead through long-term contracts. A recovery could take hold once the recent wave of ETF outflows and fund redemptions has been absorbed by the market, they suggest.