Chip ETF Sheds 17% from Peak as Chinese AI Rival Rattles Sentiment, But Record TSMC Sales Bolster the Bull Case
Published on 07/19/2026 at 18:12 | Redaktion boerse-global.de
The VanEck Semiconductor UCITS ETF has been caught between two conflicting forces: a Chinese startup’s AI model that knocked confidence and a parade of record results from the sector’s heaviest hitters. The fund closed Friday at €92.15, down 1.01% on the day and 8.83% for the week, pushing its slide from the June 30 all-time high of €111.18 to 17.12%. Yet the year-to-date gain still stands at a blistering 72.99%.
The latest trigger for selling was the unveiling of a new Large Language Model by Chinese startup Moonshot. The company claims its system matches the capabilities of offerings from OpenAI and Anthropic, and that was enough to reignite doubts about whether the AI-driven chip rally has run ahead of reality. The ETF lost more than 4% in a single session as the news broke, and the broader Philadelphia Semiconductor Index has now fallen over 13% in the past month alone. The weakness extended beyond the fund: the S&P 500 slipped 1.01% on the week to 7,457.69, while the Nasdaq Composite dropped 2.9% to close at 25,520.24.
Individual chip stocks took heavy hits. Applied Materials and LAM Research each lost roughly 5%, Intel and KLA Corporation dropped more than 4%, and both Arm and Micron shed 4% apiece. Nvidia fell 3% in pre-market trading. The selloff deepened after Kevin Warsh, the new Fed chair, struck a more hawkish tone on monetary policy, further pressuring tech-hardware names. Geopolitical jitters over US–Iran tensions added to the risk-off mood.
Despite the carnage, major Wall Street banks are refusing to call a trend reversal. Morgan Stanley has labeled the move a “mid-cycle reset” rather than a market top, a view it first expressed when the index dropped 13% in early July. JPMorgan is urging clients to buy the dip, arguing the sector’s long-term growth story remains intact. UBS and Barclays have echoed that optimism, even as the selloff continued through the same week.
Should investors sell immediately? Or is it worth buying VanEck Semiconductor UCITS ETF?
Support for that bullish stance came from Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker and a core holding in the ETF. TSMC reported record second-quarter revenue of roughly $39.6 billion on July 16, near the high end of its guidance, fueled by unrelenting demand for AI accelerators. The news failed to stem the selling, underscoring how deeply the market’s mood has shifted.
Technical indicators now paint a picture of exhaustion. The ETF trades 5.26% below its 50-day moving average of €97.27, confirming the short-term uptrend has broken. The relative strength index sits at 41.9, suggesting the overbought condition that prevailed in late June has fully unwound. Annualized 30-day volatility has surged to nearly 60%, reflecting the extreme swings gripping the sector.
A heavy calendar of earnings and policy signals lies ahead. ASML reports next, offering a window into how much TSMC, Samsung and Intel are investing in future capacity. Samsung publishes its full quarterly report on July 30, followed by Nvidia, AMD and Micron. The memory-chip market remains an uncertainty after SK Hynix announced in early July it would slow the expansion of HBM4 capacity. The debate over whether the selloff is a healthy pause or the beginning of a deeper revaluation will likely hinge on those numbers.
The fund’s concentrated portfolio amplifies the risk. Nvidia, TSMC and Broadcom together dominate its holdings, meaning any wobble in the AI data-center investment narrative hits the ETF disproportionately hard. Hedge funds have been reducing exposure to semiconductor and tech-hardware stocks for four consecutive weeks, according to Goldman Sachs prime brokerage data, though they remain net buyers of broad index and ETF products – a sign of targeted risk reduction rather than an outright abandonment of the AI trade.
The analyst community remains divided. One camp sees a mid-cycle breather, pointing to strong earnings growth and still-attractive valuations for names like Nvidia and Micron. The other warns of a potential regime change in how investors value AI infrastructure stocks altogether. For now, the gap between Wall Street’s bullish calls and the market’s technical damage is unusually wide. The next earnings reports should start to close it.
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