Memory Glut Fears and AI Payback Doubts Knock Chip ETF Off Its June Perch

iShares MSCI Global Semiconductors ETF slid 2.6% to EUR 18.03 as CXMT's DRAM progress and OpenAI's reported ~USD 50bn revenue rattled chip stocks.

A one-two punch of Chinese memory advances and cooling AI revenue expectations has left the iShares MSCI Global Semiconductors UCITS ETF USD Acc nursing a two-day slide, with the fund shedding 2.6% on Tuesday to change hands at EUR 18.03.

The retreat followed a 1.8% decline on Monday that had already pushed the ETF to a EUR 18.52 close, as a broad selloff swept across the global chip sector. At the center of the turbulence sits ChangXin Memory Technologies, the Chinese memory manufacturer whose reported progress on a denser DRAM architecture — a 4F² cell design — has rattled incumbents. CXMT president Cao Kanyu confirmed the technological milestones, and media reports indicate the company intends to bring a server memory product built on that design to market before the year is out.

The implications rippled straight through the memory supply chain. Micron took a 3.9% hit during Monday's session, while AMD and Broadcom each gave up between 1.9% and 2.3%. Nvidia slipped 1.3%, and the PHLX Semiconductor Index dropped as much as 2.7%. Asian memory heavyweights were not spared either, with SK Hynix, Samsung Electronics and Kioxia all logging notable losses as investors braced for a potential price war and market-share erosion.

OpenAI's Revenue Tally Adds a Second Layer of Pressure

While the competitive threat from China supplied the initial jolt, a separate report deepened the gloom. According to the Financial Times, OpenAI's annualized revenue stood at roughly USD 50 billion at the end of September — well short of the approximately USD 70 billion figure that had been circulating in media estimates. The gap raised uncomfortable questions about whether the enormous sums being poured into AI hardware and data centers can be converted into software-side revenue quickly enough to justify the spending.

Those doubts landed on a sector already contending with geopolitical friction. Adding to the mix, rising crude oil prices amid an unsettled situation in the Middle East stoked broader inflation worries, a headwind that tends to weigh disproportionately on rate-sensitive technology names.

Monday's session had already seen the Philadelphia Semiconductor Index touch a three-week low, with market participants hesitant to commit capital ahead of quarterly earnings from major technology companies — results widely viewed as a litmus test for whether chip-sector investment appetite can hold up.

Longer-Term Trend Lines Still Point North

For all the near-term bruising, the ETF's technical picture remains constructive. At its current price, the fund sits roughly 18% above its 200-day moving average of EUR 15.22, a level many analysts treat as a gauge of the primary trend. It also remains 4.8% above its 50-day moving average of EUR 17.67, an important reference point for medium-term direction.

The pullback has widened the gap to the fund's 52-week high of EUR 21.52, struck on June 22 — a peak the ETF now trails by about 16%. Over the past seven sessions, the fund has posted a negative performance of 5.7%.

Fund flows present a more nuanced picture than the price action alone suggests. US-listed semiconductor ETFs reported substantial outflows running into the billions last week, yet BlackRock logged persistently strong demand for technology products in the third quarter. Semiconductor offerings even notched their strongest monthly inflows since inception back in July, during an earlier correction phase — a sign that institutional investors remain willing to treat pullbacks as entry points.

Whether that appetite holds will depend on the coming corporate reports. The market now waits to see if earnings season delivers enough substance to quiet concerns about the long-term financing of AI, or whether the semiconductor sector's consolidation has further to run.