Why The iShares Semiconductor ETF (SOXX) Plunged 21% in July

The iShares Semiconductor ETF (SOXX) dropped 21.2% in July after rallying 112.8% in the first half of 2026. The decline was driven by multiple factors: short-seller Michael Burry's bearish stance on overvalued AI stocks, the release of China's capable low-cost Kimi K3 AI model raising competition concerns, and forced liquidation of the leveraged AI hedge fund Situational Awareness. Despite the pullback, strong semiconductor earnings showed no weakness in AI chip demand.