Chip ETF's 17% Correction Triggers Buying Spree Among Institutions as Earnings Defy the Selloff
Published on 07/19/2026 at 15:53 | Redaktion boerse-global.de
A stark disconnect is playing out in semiconductor equities: the VanEck Semiconductor UCITS ETF has tumbled nearly 17% from its June 30 record of €111.18, closing Friday at €92.15, yet some of Wall Street’s biggest names are urging investors to load up. The fund's 8.83% weekly drop and 9.78% decline over 30 days have been fueled by fears that a low-cost Chinese AI model could undercut the need for massive US infrastructure spending, even as TSMC and ASML deliver their strongest numbers in years.
The trigger was Kimi K3, an open-source language model from Beijing-based Moonshot AI boasting 2.8 trillion parameters. Unveiled at the World AI Conference in Shanghai, the model claims parity with systems from OpenAI and Anthropic at a fraction of the cost, with full weight releases promised by end of July. The Philadelphia Semiconductor Index suffered its steepest weekly loss in 15 months, shedding roughly 12.5%, as single stocks like Applied Materials, Nvidia, and Micron each gave up low-to-mid single digits in a single session. In Hong Kong, Chinese AI rivals Zhipu and MiniMax saw double-digit plunges—ironically, Moonshot itself is reportedly seeking a $2 billion funding round at a $30 billion valuation and mulling a Hong Kong IPO.
Yet the selling pressure has done little to dampen institutional appetite. US asset managers significantly boosted their ETF positions in the first quarter of 2026: Assetmark increased its stake by 25%, Fifth Third Bancorp multiplied its position more than 32-fold, Hanseatic Management Services launched a $2.3 million new investment, and Vision Retirement added 16.2%. Overall, roughly $25 billion flowed into semiconductor ETFs during the quarter, according to media reports, suggesting that the correction is being viewed as a buying window rather than a reason to flee.
Should investors sell immediately? Or is it worth buying VanEck Semiconductor UCITS ETF?
The bull case rests squarely on fundamentals that remain unshaken. TSMC posted second-quarter revenue of $40.2 billion, a 33.7% year-over-year jump, with gross margin rising for the fourth consecutive quarter to 67.7%. Guidance for the third quarter ranges from $44.6 billion to $45.8 billion, and the company lifted its full-year growth forecast to "slightly above 40%." Capital expenditure for 2026 was raised to $60–64 billion, complemented by an additional $100 billion commitment in Arizona that President Trump announced via Truth Social, bringing the total US investment there to $265 billion. ASML, for its part, raised its annual outlook for the second time, citing "exceptionally strong order momentum." Nevertheless, both stocks fell on their respective report days—TSMC 2.96%, ASML 2.06%—underscoring how geopolitical anxieties and valuation concerns are overriding operational strength for now.
Analysts are pushing back against the narrative of a crash. Morgan Stanley describes the pullback as a "mid-cycle reset" rather than a cyclical peak, a call it made after the underlying index shed 13% in ten trading days at the start of July. JPMorgan explicitly advises clients to use the dip as an entry point, while UBS projects operating profit growth of 92% for Philadelphia Semiconductor Index constituents in 2026, followed by an additional 40% in 2027. Barclays attributes the sell-off primarily to passive portfolio rebalancing rather than panic, and the World Semiconductor Trade Statistics (WSTS) expects global semiconductor market growth of 90% this year and 27% next year, with May revenue growth accelerating to 119% year-over-year from 106% in April.
Technically, the fund has lost momentum. It now trades 5.26% below its 50-day moving average, and its relative strength index stands at 41.9—down sharply from the euphoric levels of late June. That RSI reading, while not oversold, signals fading buying pressure. Yet the longer-term picture tempers the alarm: the ETF is still up 72.99% year-to-date and 119.09% over twelve months. The debate now centers on whether this is a healthy air pocket or the start of a deeper revaluation.
Concentration risk remains the fund's Achilles' heel. Nvidia, Taiwan Semiconductor, and Broadcom dominate the portfolio, meaning any wobble in the AI data-center investment thesis hits the fund disproportionately hard. The upcoming earnings reports from other major chipmakers will provide the next test of Morgan Stanley's mid-cycle reset thesis. Until then, the gap between bullish bank calls and deteriorating chart indicators is unusually wide—leaving the market to sort out which side is right.
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