The semiconductor sector is having a rough summer. The Philadelphia Semiconductor Index, better known as the SOX, has dropped more than 20% from its late June peak, officially pushing the group into bear market territory. That follows an extraordinary 105% rally between March and late June that was fueled almost entirely by AI infrastructure spending.
How we got here
The setup was almost too good to last. Hyperscalers, the Amazons, Microsofts, and Googles of the world, spent aggressively on AI accelerator chips and memory infrastructure. The SOX responded accordingly, more than doubling in roughly three months.
Then the hangover hit. The index posted an 11% weekly decline, its worst single-week drop since March 2025, as investors began questioning whether the AI capital expenditure cycle could sustain that kind of momentum.
The correction has been broad but uneven. Memory chip names like Kioxia and SanDisk have held up better than most, remaining up approximately 600% year-to-date even after the recent pullback.
