Share prices of major US semiconductor suppliers have been declining for eight consecutive trading sessions, marking the longest continuous drop in 16 years. According to editorial estimates, this trend no longer looks like a routine technical correction: investors have been alarmed by multiple signals ranging from warnings about memory overproduction risks by 2029 to mounting pressure from Chinese manufacturers. Against this backdrop, the decline of semiconductor securities included in the ICE Semi index (30 issuers) is gaining momentum and attracting the attention of analysts who, however, hasten to calm the market: talking about a systemic collapse of AI infrastructure is premature.
Scale of Correction: SOXX Index Figures
The dynamics are best reflected by the iShares Semiconductor ETF (SOXX): its shares have lost 14% from October highs, dropping to $514.71 as of Thursday. At the same time, a short-lived resistance to the negative trend emerged on the same day—the index briefly broke below $496 before closing the session above the opening level. Structurally, the market is concentrated: the top ten US semiconductor issuers account for 62% of SOXX index assets. These are AMD, Intel, Nvidia, Micron, Broadcom, Marvell Technology, Analog Devices, Texas Instruments, KLA, and Qualcomm. Individual losses are impressive: Intel lost over 20% of its market capitalization in two weeks, and AMD dropped by more than 5% during the trading session on October 14 alone.
Overproduction and the «Chinese Factor»
Among the key triggers of the correction, analysts cite warnings from certain semiconductor industry representatives about the threat of memory overproduction by 2029. Additional negative momentum came from arguments regarding strengthening Chinese memory manufacturers: the «Chinese threat» to two Korean and one American player is becoming increasingly clear, which prevented their stocks from avoiding a decline. Thus, pressure on quotes is forming not only within the US market but also amid the global restructuring of memory supply chains.
Shadow of the AI Boom: OpenAI Revenue and Fed Rate
Problems within the AI boom itself have also affected chipmakers. Preparing for an IPO, OpenAI admitted that its annualized revenue is capped at $50 billion rather than $70 billion as investors recently believed. Meanwhile, the head of Broadcom compared investment activity in AI to playing in a casino, further undermining market confidence. On top of this, rising US inflation increased the likelihood of a key interest rate hike: more expensive borrowed funds drive up the financing costs of AI projects and increase pressure on semiconductor segment quotes.
Analyst Perspective: Recalibration, Not a Break
UBS analysts prefer to classify the current trend as a «recalibration» rather than a fundamental break in the AI investment story. Their argument: tech giants that plan to direct nearly $800 billion into capital construction this year alone are unlikely to significantly revise their plans. By this logic, the problem in the financial sector lies more in the cost of borrowed capital rather than a lack of demand for new AI infrastructure. In other words, some analysts believe the market is revising not the investment logic itself, but its price and payback periods.
The outcome of the first half of October is a picture where the record-long slump of chipmakers coexists with signs of local resistance and divergent opinions: some participants see the movement as a signal of impending overproduction and AI revaluation, while others view it as merely a temporary recalibration before a new round of capital expenditures. The resolution of this dispute will likely become known as major issuers disclose updated forecasts and the market reacts to key rate decisions.
