The Chip Sell-Off Is Not Just About AI: There’s a Bigger Problem Under the Hood

Tuesday's semiconductor sell-off extends beyond AI concerns to reveal structural market issues. Leveraged ETFs like SOXL use daily rebalancing that amplifies downturns, forcing selling that exacerbates price declines. South Korea's regulatory warning about overheated leveraged chip ETFs triggered a 10% Kospi drop, affecting global memory chip stocks. The sector faces a critical test with Micron's earnings on June 24, where forward guidance on HBM demand and data center orders will determine if the AI spending cycle remains intact.