Shares of semiconductor-related companies both domestically and globally took a hit as TSMC, the world’s largest semiconductor foundry, announced a delay in equipment deliveries for its facility expansion. The news has led to concerns about the early recovery of the semiconductor industry, causing significant losses for investors who heavily bought 3x leveraged exchange-traded funds (ETFs) in anticipation of a semiconductor rebound.

In Monday’s trading on the Korea Exchange (KRX), Samsung Electronics dropped by 2.5 percent, and SK hynix saw a 2.78 percent decline. Notably, semiconductor material, component, and equipment-related stocks, such as Hanmi Semiconductor and HPSP, also saw sharp drops, with declines of 7.02 percent and 6.08 percent respectively. Consequently, the KRX Semiconductor Index declined by 3.26 percent compared to the previous trading day.

Foreign investors led the sell-off, offloading 367 billion won ($2.77 million) worth of shares in the South Korean market, including 110.8 billion won worth of Samsung Electronics and 35.9 billion won worth of SK hynix.

The negative sentiment in semiconductor investment was exacerbated by a 3 percent drop in the Philadelphia Semiconductor Index over the weekend. TSMC’s announcement of delivery delays due to uncertain demand caused the company’s shares to fall by 2.43 percent while equipment suppliers, including ASML (-4.06 percent) and Lam Research (-5.08 percent), saw even larger declines.

Investors who heavily bought the 3x leveraged ETF SOXL, which tracks the Philadelphia Semiconductor Index, suffered substantial losses, recording an 8.6 percent valuation fall in a single day. This ETF has become popular among Korean individual investors who sought exposure to the U.S. stock market over the past week.

While recent reports from domestic securities analysts suggested more exposure to semiconductor stocks, the market sentiment differed significantly on that day. TSMC reiterated that the growth in demand for AI chips cannot compensate for the sluggish demand in other sectors such as smartphones and laptops.

However, despite temporary sentiment setbacks, memory chip prices have been rebounding due to ongoing supply cuts, suggesting that the share prices of companies including Samsung Electronics and SK hynix could already have hit rock-bottom in the medium to long term, according to multiple experts.

By Kim Je-lim, Moon Ji-woong, and Minu Kim

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