The semiconductor sector, which spent the better part of two years as Wall Street’s golden child, is now getting the cold shoulder. The Philadelphia Semiconductor Index, known as SOX, has shed over 11% from its June 2026 high. Memory-chip giants Micron, Samsung, and SK Hynix have already crossed the dreaded 20% decline threshold, officially putting them in bear market territory as of July 7.
Roughly $1.5 trillion in semiconductor market value has been wiped out since late June 25. For context, that’s more than the entire GDP of Spain, gone in about two weeks.
The AI hype cycle hits a wall
The SOX index had been on an absolute tear, climbing approximately 83% on the back of insatiable demand for AI chips.
Growing concerns about sky-high valuations started to take hold. Analysts began questioning whether AI-related infrastructure spending could sustain its breakneck pace. Major memory manufacturers have also started pivoting toward lower-margin products.
