The valuation correction in U.S. semiconductor and AI sectors has impacted Asian markets, triggering large-scale selling in Japan and Asia’s technology supply chain on July 17. The Philadelphia Semiconductor Index fell 4.3% on July 16. Despite TSMC reporting a 77.4% year-over-year increase in second-quarter net profit and raising its full-year capital expenditure guidance from $52 billion to $56 billion to $60 billion to $64 billion, its ADR declined 2.3%. Bloomberg macro strategists noted that U.S. market declines led to liquidations in leveraged equity funds, causing significant quantitative outflows from Japanese tech stocks such as Kioxia, Tokyo Electron, Advantest, and SoftBank. Geopolitical tensions, commodity valuation pressures, and concerns over inflation and high interest rates have increased downside risks for high-premium growth-oriented tech stocks.
U.S. semiconductor and AI sectors face valuation correction; Asian markets hit by sell-off
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Summary
A correction hit the U.S. semiconductor and AI sectors on July 16, with the Philadelphia Semiconductor Index declining 4.3%. The Fear & Greed Index turned sharply negative as the sell-off spread to Asian markets on July 17, pulling down Japanese and Asian tech supply chains. TSMC reported a 77.4% year-over-year increase in Q2 net profit and raised its full-year capital expenditure guidance to $60–64 billion, yet its ADR fell 2.3%. Bloomberg strategists attributed the move to leveraged fund liquidations in the U.S., which triggered outflows from Japanese tech stocks such as Kioxia and SoftBank. Rising geopolitical tensions, inflation concerns, and high interest rates are adding pressure to high-valuation growth tech stocks.
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