Semiconductor ETF closes down over 4% as AI spending doubts weigh on the sector

The VanEck Semiconductor ETF closed at $569.77 on August 18, a drop of 4.09% from its prior close of $594.07. For a fund that had been one of the market’s biggest winners this year, that’s a meaningful stumble in a single afternoon. The selloff hit despite reasonably supportive macro conditions. Geopolitical tensions between the US and Iran had eased, and oil prices were moving lower, the kind of backdrop that usually gives risk assets a tailwind. Chip stocks fell anyway, which tells you the pressure was coming from inside the house. A sector that flew too close to the sun To understand why a 4% drop matters, it helps to know where SMH has been. The ETF had posted year-to-date gains in the range of 64 to 65% as of mid-August, a run that turned the fund into a Wall Street darling largely on the back of AI infrastructure spending. Total net assets sat near $71.5 billion, making it one of the largest and most closely watched sector ETFs in the market. The August 18 close also came after SMH had traded as high as roughly $600.37 intraday on August 17, meaning the fund gave back significant ground in just over 24 hours. July’s trillion-dollar warning sign The August decline did not arri...