Global chip rout deepens, AI rally wanes
Analysis based on 32 articles · First reported Jul 17, 2026 · Last updated Jul 21, 2026
The semiconductor rout has erased significant market value, with the PHLX index down over 20% from its peak, raising fears of a broader correction. The selloff may pressure central banks to reconsider rate paths if it persists, while oil price gains from geopolitical tensions add to inflation concerns.
A brutal selloff in chipmakers rippled through global markets on July 17, 2026, triggering a rout across Asia and steep losses in European Union — Europe and the U.S. as investors abruptly reassessed the durability of the artificial-intelligence-driven rally. The Philadelphia Semiconductor Index fell 18% in July and ended down over 20% from its late-June all-time high. MSCI's broadest index of Asia-Pacific shares outside Japan fell 2.7%, the Nikkei 225 tumbled 5%, Taiwan's stock market plunged 6%, and the Hang Seng Index slid 2.5%. Despite strong earnings from TSMC and ASML raising 2026 forecasts, sentiment shifted due to concerns over AI spending sustainability and leveraged ETF unwinding. Netflix's weak forecast added pressure. Oil prices rose amid renewed U.S.-Iran strikes, with Brent crude up 0.1% and WTI up 0.27%. The dollar held steady as Fed rate hike expectations receded. South Korea banned new ETF listings to curb volatility. The selloff was exacerbated by retail investors unwinding leveraged positions.
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