Rate Fears and China's Memory Push Send Chip ETF Down 4.2% to EUR 16.83

The iShares MSCI Global Semiconductors UCITS ETF USD Acc fell 4.2% on Thursday to EUR 16.83, extending a selloff that has now gripped the global semiconductor sector for six consecutive trading sessions.

Two forces are doing the damage. The first is familiar: persistent anxiety over interest rates. The second is newer and more specific to the chip industry — reports of technological breakthroughs at Chinese memory-chip maker CXMT, which Reuters said have sharpened competitive fears across the sector and compounded existing doubts about whether the enormous sums being poured into artificial intelligence will ever pay off.

A selloff that spans three continents

The pain is not confined to any single market. Reuters reported that major Asian chipmakers also dropped sharply on Thursday, with Samsung Electronics, SK Hynix and Kioxia all losing ground. The news agency placed the rout within a broader, rate-driven technology downturn, one further stoked by financing concerns surrounding multi-billion-dollar AI data-center projects.

Sentiment has also been dented from inside the industry itself. Broadcom chief Hock Tan publicly questioned whether many AI customers are actually generating measurable returns on their heavy spending, according to Axios. He went further, likening certain investment flows into the sector to "casino gambling." Such skepticism lands hard on an industry that has spent recent months riding the promise of future AI profits — when that narrative wobbles, prices react sharply.

The macro backdrop made matters worse. U.S. inflation for September came in at 3.7% year-on-year, up from 3.4% in August and above the 3.6% economists had expected, according to Reuters and Bloomberg. The hotter-than-forecast reading fueled speculation about further Federal Reserve rate hikes and pushed bond yields higher, increasing financing pressure on richly valued technology and AI stocks — semiconductors included.

Supply-chain fallout from Asia to Philadelphia

The consequences rippled across the entire supply chain. The Philadelphia Semiconductor Index dropped 3.1% on Wednesday, its sixth straight losing session. In Asia, the damage was steeper still: Samsung Electronics shed 9.7%, SK Hynix 11.1% and Tokyo Electron 7.5%. Taiwan Semiconductor Manufacturing gave up 1.8% ahead of its quarterly earnings release.

Wednesday's decline left the ETF at EUR 17.67, a 3.3% drop on the day. Thursday's further slide to EUR 16.83 brought the six-session losing streak to its current level.

A bruising week against a banner year

Set against the broader arc of 2025, the recent weakness looks like a speed bump. The ETF is still up 76% year-to-date, a figure that underscores just how large the past few days' correction looms relative to the annual rally — even if it stings in the short term. The fund continues to trade well above its 200-day moving average, though near-term momentum has clearly suffered.

For a vehicle that tracks the global semiconductor industry through its largest index heavyweights, the current mix of rate worries, Chinese competition and mounting skepticism about AI investment returns amounts to a stress test for this year's rally.

Whether the six-day losing streak runs further will likely hinge on two things: how the debate over CXMT's technological progress unfolds, and where financing conditions for data centers head in the coming weeks. Investors are also watching for Taiwan Semiconductor Manufacturing's upcoming quarterly results, seen as the next major sentiment gauge for the entire sector.