Semiconductor ETF Rebounds After Steep Selloff as TSMC Expansion and Nvidia Tailwinds Offset Dilution Fears

The iShares MSCI Global Semiconductors UCITS ETF staged a dramatic recovery on Friday, closing at €19.37 — a 5.12% jump from the prior day’s €18.42. The bounce came after a brutal 7.04% rout in the first week of July that saw the fund tumble 14.41% from its June record high of €21.52. Despite the relief rally, the ETF still posted a 2.28% decline over the trailing seven days, underscoring the volatile mood gripping chip investors.

What Triggered the Selloff

Two shocks sent the sector reeling on July 2. ON Semiconductor plunged roughly 20% after announcing it would acquire Synaptics using new shares, sparking dilution fears that ricocheted through the industry. Meanwhile, Meta Platforms confirmed plans to sell excess cloud and AI computing capacity to external customers, unnerving investors in so-called Neocloud providers that buy expensive chips and rent them out. The twin blows compounded existing profit-taking in heavyweights: ASML had fallen 4.67% on Tuesday after a prior 6.11% drop, and Micron Technology shed more than 8% after nearly tripling in value earlier this year.

In Asia, the pain intensified before abating. The Korean KOSPI index crashed nearly 8% before Samsung Electronics and SK Hynix recovered modestly on Friday. Korea Investment & Securities trimmed its estimate for Samsung’s current quarterly earnings by 10%, citing one-off compensation costs.

Recovery Drivers Emerge

By Friday, investors refocused on the sector’s structural tailwinds. A 20 billion dollar investment in TSMC’s Arizona subsidiary received regulatory approval on July 2, funding a new 12-inch wafer fab and advanced packaging facilities critical for next-generation AI chips. Nvidia confirmed that its Blackwell architecture has entered volume production at TSMC’s Phoenix plant, underscoring the push to onshore critical hardware. The chip giant is also rolling out a revenue-sharing model to lock in emerging GPU-cloud providers.

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Sentiment got an additional boost from a July 1 industry-wide price increase for power semiconductors, a sign that demand from AI and automotive markets remains robust.

A Divided Landscape

The recovery masks divergent trends within the ETF. Equipment makers such as KLA Corporation and Lam Research continue to face headwinds from a NAND memory oversupply that could persist into the third quarter of 2026, while demand for AI-specific logic chips stays resilient. The Relative Strength Index (14-day) stands at 51.3, a neutral reading following the correction, and the fund’s price remains 8.57% above its 50-day moving average of €17.84 — keeping the medium-term uptrend intact despite the turbulence.

Year-to-date, the iShares Global Semiconductors ETF has still gained 86.61%, led by its top holdings of Micron, AMD, and Broadcom. The question now is whether the recovery can hold or if the dilution and cloud-capacity concerns will trigger another leg lower.