There’s been a selloff in the semiconductor sector, and exchange traded funds (ETFs) are no exception. Just days into earnings season, semis were flying high. Now they’ve stalled. What gives?
The stock of Intel (NASDAQ: INTC), rival Advanced Micro Devices Inc. (NYSE: AMD) and other chip vendors have been closing lower of late, dragging ETFs down with them. In the last two weeks, funds such as iShares S&P North America Technology-Semiconductors (NYSEArca: IGW) are down as much as 6%.
There are a few things happening here:
- Intel, viewed as the sector’s bellwether, was downgraded from outperform to neutral by analysts. [Will Semiconductors Get a Revival?]
- One culprit: A sudden drop-off in demand for PCs is one culprit, and it’s giving the chip industry a reversal of fortune, reports Frank Michael Russell for Mercury News.
The PC industry is of no small importance for the semiconductor sector. Dylan McCrath for ETTimes reports that the PC end market is the single largest end market for semiconductors at roughly 40% of total semiconductor revenue. PC demand is weakening all over, from the United States and China to Europe. [Sector highlight: semiconductors]
- SPDR S&P Semiconductor (NYSEArca: XSD): Intel 4%;
- iShares S&P North America Technology-Semiconductors (NYSEArca: IGW): Intel 8.4%; AMD 1.8%
- PowerShares Dynamic Semiconductors (NYSEArca: PSI): Intel 4.8%
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.