Semiconductor ETFs Rally Over 2% Then Retreat 3% as Leveraged Shares Fall 9%
iShares Semiconductor ETF and VanEck Semiconductor ETF each gained over 2% Wednesday, while leveraged SOXL jumped 6%, before Thursday losses erased gains with around 3% declines for SOXX and SMH and a 9% plunge in SOXL. These swings reflect AI demand optimism colliding with geopolitical and trade uncertainties.
1. Sharp Two-Day Reversal in Semiconductor ETFs
Chip-focused ETFs surged more than 2% on Wednesday, with the iShares Semiconductor ETF and VanEck Semiconductor ETF each adding over 2% and the Direxion Daily Semiconductor Bull 3X Shares jumping 6%. However, a market downturn on Thursday saw the two main ETFs fall roughly 3% each and the leveraged fund plunge about 9%.
2. Geopolitical Tensions Fuel Market Uncertainty
Escalating Israel–Iran conflict concerns have heightened fears of trade disruptions and energy market shocks. With semiconductor supply chains spanning U.S. design, Asian fabrication and global assembly hubs, any geopolitical flare-up poses risks of logistics delays and cost increases for chipmakers.
3. AI Demand Provides Underlying Support
Despite short-term swings, long-term demand for AI infrastructure underpins the sector outlook. ETF weightings favor companies producing advanced processors for AI training and data centers, bolstering the bull case for semiconductor investments even in volatile conditions.
4. Trade Policy Adds Additional Fluctuations
Potential U.S. tariffs and export restrictions targeting China inject further uncertainty into chip supply chains. Investors are weighing how evolving trade measures could reshape revenue prospects for both semiconductor manufacturers and equipment suppliers, driving heightened sensitivity to policy developments.