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The VanEck Semiconductor ETF (NASDAQ: SMH) had declined for six straight sessions by October 13, 2026, putting it on course for its longest losing streak since May 2025. One report measured the decline at more than 8% across those six sessions, while a separate syndicated report recorded a 5.3% fall over five days. The pullback has revived questions about whether the artificial-intelligence chip trade is overheated or simply pausing after a powerful run.
What is happening to SMH?
SMH is an exchange-traded fund holding major semiconductor companies. Its six-session decline through October 13 represented the fund’s longest prospective losing streak in roughly 17 months. The measurement windows matter: the reported six-day loss was more than 8%, the five-day loss was 5.3%, and the fund was still up 62.1% year to date in the separate five-day report.
Those figures describe different periods and should not be combined into a single performance statistic. A losing streak records consecutive down sessions; it does not by itself establish that a longer-term trend has reversed.
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Why are semiconductor stocks falling?
Concern that the AI trade is overheated
Investors have begun questioning whether spending on AI accelerators, servers and data-center infrastructure can keep expanding quickly enough to justify elevated semiconductor valuations. The concern is about the durability and timing of demand, not evidence that AI hardware orders have stopped.
Higher financing costs
Rising funding costs can reduce the present value investors assign to high-growth companies and make large data-center projects more expensive to finance. That pressure can affect chip designers, manufacturers and equipment suppliers even when their reported sales remain strong.
Growing Chinese competition
Reports also pointed to increasing competition from China across several chip categories. Competitive pressure can weigh on expected margins and market share, particularly where investors had priced in years of unusually strong growth.
Broad weakness across the supply chain
The selling was described as broad across memory and semiconductor-equipment makers, although individual holdings moved differently on the cited day. A broad decline suggests the market is reassessing sector-wide assumptions rather than reacting to one company’s isolated announcement.
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The bear case and the bull case
| Question | Bearish interpretation | Bullish interpretation |
|---|---|---|
| AI capital spending | Demand and valuations may have run ahead of sustainable cash flows. | The pullback is a pause within a continuing AI-infrastructure buildout. |
| Financing costs | More expensive capital could delay projects and compress valuation multiples. | Large technology customers can continue funding strategic AI capacity despite higher rates. |
| China competition | New competitors could erode pricing power and market share. | Leading suppliers retain technological, manufacturing and ecosystem advantages in key segments. |
| Market signal | A six-day slide may be the start of a deeper de-rating. | Short losing streaks can occur inside a larger uptrend. |
| Exports and demand indicators | Weakness in forward indicators would challenge the growth narrative. | South Korea’s export momentum is being watched as a leading signal for memory and broader chip demand. |
Neil Sethi, managing partner of Sethi Associates, characterized the bullish view as “just a breather before an uptrend resumed.” Andreas Steno Larsen, CIO of Steno Global Macro Invest and founder of Steno Research, took an even stronger position, saying it had “basically never been more idiotic to be bearish on the AI hardware trade than right now.” Those are analyst opinions, not guarantees about future returns.
What does SMH own?
The ETF’s reported top 10 holdings span much of the semiconductor value chain:
| Holding | Primary exposure |
|---|---|
| Nvidia | AI accelerators and platform hardware |
| Taiwan Semiconductor Manufacturing Co. | Contract chip manufacturing |
| Advanced Micro Devices | Processors and data-center accelerators |
| Broadcom | Networking, connectivity and custom silicon |
| Micron Technology | Memory |
| Intel | Processors and manufacturing |
| Applied Materials | Semiconductor manufacturing equipment |
| Texas Instruments | Analog and embedded chips |
| KLA Corp. | Process control and inspection equipment |
| ASML Holding | Advanced wafer-fabrication equipment |
Because these companies serve different parts of the industry, SMH is not a pure bet on one AI-chip designer. It combines accelerator, foundry, memory, analog, networking and equipment exposure. However, the largest positions and the sector’s shared sensitivity to capital spending can still make the ETF move sharply when investors change their view of AI demand.
Is the six-day slide a buying opportunity?
That depends on whether the decline reflects a temporary valuation reset or a deterioration in earnings and capital-spending expectations. Investors evaluating the question should examine:
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- memory pricing and inventory trends;
- equipment orders and utilization at chip manufacturers;
- the effect of financing costs on new data-center projects;
- competitive gains by Chinese suppliers; and
- SMH’s concentration and valuation relative to its own history.
South Korea’s exports are being used by bullish analysts as a leading indicator, while Steno Research reportedly cited a value gap of more than 150%. That gap is an analyst or research-house assessment, not an independently verified market statistic in the available reporting. A strong export signal would support the continuation thesis, but it would not remove valuation or concentration risk.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to read the selloff without overreacting
- Separate the time frames. Use the more-than-8% figure for the six-session slide, 5.3% for the five-day period, and 62.1% for the year-to-date result.
- Check breadth. Compare memory, equipment, foundry, analog and accelerator shares instead of treating one holding as the whole sector.
- Track fundamentals. Look for changes in orders, margins, inventories and customer spending rather than relying only on daily price action.
- Account for concentration. An ETF reduces single-company risk but still carries correlated semiconductor and AI-capex exposure.
- Match the position to your horizon. A short-term trader and a long-term investor may reasonably reach different conclusions from the same six-day streak.
The central distinction is between a losing streak and a broken trend. The available reports establish the former; deciding whether the latter has occurred requires evidence from company results, customer budgets and industry indicators that develops over time.
Frequently Asked Questions
How much did SMH fall in the reported selloff?
The reported six-session decline was more than 8%. A separate report measured a 5.3% decline over five days, so the figures refer to different measurement windows.
Why does South Korea matter to semiconductor investors?
South Korean export data are watched as a leading signal for memory and related chip demand. Analysts cited that momentum in support of the bullish interpretation, but exports do not guarantee SMH’s future performance.
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No. Its reported top holdings include accelerator, foundry, memory, analog, networking and semiconductor-equipment companies, giving it broad but correlated industry exposure.
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