Once a hot and soaring corner of the broader technology sector, semiconductor is now stuck in the web of woes amid U.S.-China trade showdown and waning demand for memory chips. Now, a deluge of disappointing earnings from leading chipmakers and a sell-off in the broader markets have compounded the chaos.
In fact, semiconductor stocks took a huge beating in Wednesday’s session, logging their worst day in a decade. This is especially true as most of the chipmakers fell more than 10% with the biggest drop in shares of Semtech (SMTC – Free Report), Cypress Semiconductor (CY – Free Report) and Nvidia (NVDA – Free Report).
The cautious commentary from Texas Instruments (TXN – Free Report) and STMicroelectronics (STM – Free Report) triggered the sell-off in the sector. Texas Instruments tumbled 8.2% after disappointing quarterly earnings and a lowered outlook, while STM plunged 13.8% following the signals of a slowdown in demand from China. Further, Advanced Micro Devices (AMD – Free Report) compounded the pain after missing the revenue estimates and offering weak guidance that sent its shares tumbling more than 25% in after-hours trading on Wednesday.
ETF Impact
The awful trading in the stock world also pushed the semiconductor ETF space into the red on the day. In particular, VanEck Vectors Semiconductor ETF(SMH – Free Report), Invesco Dynamic Semiconductors ETF (PSI – Free Report), iShares PHLX Semiconductor ETF (SOXX – Free Report) and SPDR S&P Semiconductor ETF (XSD – Free Report) tumbled nearly 7% each at the close.
Below we profile these ETFs in detail and discuss some of the specifics behind their recent slump:
SMH
This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. It is heavily concentrated on the top two firms with double-digit exposure each while other firms hold less than 8.2%. The product has managed assets worth $829.7 million and charges 35 bps in annual fees and expenses.
