Global semiconductor sector loses $3 trillion in market value in a month

The global semiconductor industry lost more than $3 trillion in market capitalisation during July amid growing concerns over excessive investment in artificial intelligence (AI) and fears that technology companies had become overvalued.

However, chipmakers have since begun to recover, supported by strong earnings from major cloud computing companies.

According to the Financial Times, the combined market value of the world's 80 largest semiconductor companies fell by more than $3 trillion from the beginning of July to its lowest point during the month.

The iShares Semiconductor ETF, which tracks the performance of major US chipmakers, declined 22.1 per cent in July, marking its steepest monthly fall since December 2002.

Despite the sharp correction, the fund remains 67.7 per cent higher than it was at the start of the year.

The semiconductor market experienced significant volatility throughout July. The Philadelphia Semiconductor Index rose nearly 10 per cent over 30 and 31 July.

Shares of US memory chipmaker Micron Technology jumped 18.4 per cent in a single trading session before falling 5.9 per cent the following day.

South Korea's market was even more volatile. On 28 July, the KOSPI index dropped 10.8 per cent, while shares of Samsung Electronics fell 13.4 per cent and SK Hynix lost 14.7 per cent. Within just three days, however, the benchmark index had rebounded by nearly 18 per cent.

Despite the market turbulence, the financial performance of leading chipmakers remained robust. Nvidia reported first-quarter revenue of $81.6 billion, an 85 per cent increase from a year earlier.

Micron Technology posted a 346 per cent rise in earnings.

Samsung Electronics reported record second-quarter revenue of nearly $124 billion, while SK Hynix recorded a 257 per cent increase in revenue and a 557 per cent jump in operating profit. Taiwan's TSMC also reported 67.9 per cent year-on-year revenue growth in June.