To The Moon

Semiconductor ETFs suffered a sharp sell-off overnight. The Direxion Daily Semiconductor Bull 3X ETF fell 7.83%, the Roundhill Memory ETF dropped 5.89%, and the Direxion Daily MSCI South Korea Bull 3X ETF declined 7.86%.$三倍做多半导体ETF-Direxion Daily(SOXL)$$Roundhill Memory ETF(DRAM)$$3倍做多韩国ETF-Direxion(KORU)$

So, what caused this sharp decline? I believe there were several contributing factors.

1. Cooling enthusiasm for the AI trade

Investor enthusiasm for the AI trade has started to cool. Combined with tighter regulatory measures aimed at curbing demand, this has resulted in nearly $1 billion of outflows this month from leveraged ETFs linked to South Korea and its major chipmakers.

2. Leveraged products amplified market volatility and capital outflows

According to data compiled by Bloomberg Intelligence, leveraged products linked to Samsung Electronics have recorded outflows of $381 million since the beginning of August, while products tracking SK Hynix have seen outflows of $601 million.

This is set to be the first month of net outflows since these products were launched in late May. The products have also been blamed for amplifying broader market volatility. This was particularly evident in July, when South Korea’s KOSPI suffered a historic 22% decline alongside a global sell-off in AI-related stocks.

3. Potential new US tariffs triggered broader selling

The United States is reportedly planning to impose an additional 7.5% “overcapacity tariff” on Chinese goods ahead of Chinese President Xi Jinping’s expected visit to the US next month.

US semiconductor stocks were sold off again overnight, with the Philadelphia Semiconductor Index closing 2.7% lower. Asian technology and semiconductor stocks may consequently remain under pressure.

From my perspective, the current decline is primarily a correction following excessive enthusiasm surrounding the AI cycle. The AI supercycle is not over, and I remain bullish on the sector over the coming year.

Recommended Semiconductor ETFs

1. SOXL$三倍做多半导体ETF-Direxion Daily(SOXL)$

• Expense ratio: 0.75%

• Assets under management: $19.94 billion

• Ten-year annualized return: 47.87%

SOXL’s full name is the Direxion Daily Semiconductor Bull 3X Shares. It seeks to deliver three times the daily performance of the NYSE Semiconductor Index.

The fund provides exposure to semiconductor companies including Nvidia, Broadcom, AMD and TSMC. It is extremely volatile and is primarily suited to short-term trading. Investors should not expect its long-term cumulative return to remain exactly three times that of the underlying index.

2. DRAM$Roundhill Memory ETF(DRAM)$

• Expense ratio: 0.65%

• Assets under management: $27.91 billion

DRAM’s full name is the Roundhill Memory ETF. It is a non-leveraged, actively managed memory-chip ETF focused on the HBM, DRAM and NAND supply chains.

Representative holdings include Micron, Samsung Electronics, SK Hynix, SanDisk and Kioxia. Compared with SMH, DRAM is more sensitive to memory-chip prices, HBM demand and inventory cycles.

3. KORU$3倍做多韩国ETF-Direxion(KORU)$

• Expense ratio: 1.32%

• Assets under management: $1.488 billion

• Ten-year annualized return: 2.04%

KORU’s full name is the Direxion Daily MSCI South Korea Bull 3X Shares. It seeks to deliver three times the daily performance of the MSCI Korea 25/50 Index.

SK Hynix and Samsung Electronics together account for approximately 51% of the index, while information technology represents around 57%. KORU is therefore highly sensitive to the performance of South Korea’s semiconductor industry.

4. SMH$半导体指数ETF-HOLDRs(SMH)$

• Expense ratio: 0.35%

• Assets under management: $66.42 billion

• Ten-year annualized return: 34.0%

SMH’s full name is the VanEck Semiconductor ETF. It is a non-leveraged fund tracking 25 major US-listed semiconductor companies across chip design, foundries, memory chips and semiconductor equipment.

Its major holdings include Nvidia, TSMC, Broadcom, Micron, AMD and ASML. It is one of the most representative ETFs for tracking the overall performance of the global semiconductor industry.