Semiconductor stocks kicked off the third quarter with their worst two-day decline in nearly a month, reminding investors that even the hottest trade on Wall Street occasionally needs to cool down.

The Philadelphia Semiconductor Index (SOX) and the iShares Semiconductor ETF (SMH) both posted losses in the range of 7% to 10% during the selloff, erasing roughly $1.3 to $1.4 trillion in market value across the sector.

What triggered the slide

The catalyst traces back to Broadcom’s earnings report, which failed to deliver the upward revision in AI chip guidance that the market had been pricing in.

Broadcom shares cratered between 12% and 19% across multiple sessions in early June 2026.

Memory chip makers got caught in the undertow. Micron and Western Digital saw declines ranging from 8% to 17%, driven by a combination of profit-taking and rising cost pressures.

Adding fuel to the fire was a robust jobs report that shifted interest rate expectations toward potential Fed rate hikes. Higher rates make future earnings less valuable in today’s dollars, and semiconductor stocks, with their sky-high multiples built on years of projected AI growth, are particularly sensitive to that math.

The SMH and SOX indices recorded their largest single-day drops since March 2020 during the June 5–6 timeframe.

The bigger picture still looks green

Despite the brutal two-day stretch, semiconductor ETFs remained up approximately 70% to 80% year-to-date in 2026, after nearly doubling earlier in the year on AI momentum alone.

The pain wasn’t confined to US markets either. Asian semiconductor stocks mirrored the declines, with Samsung and SK Hynix dragging regional indices like Korea’s KOSPI lower.

What this means for crypto investors

Semiconductor companies supply the GPUs and ASICs that power crypto mining operations. A prolonged downturn in chip stocks could signal broader shifts in hardware supply economics. If chipmakers pull back on capacity expansion, that could tighten supply for mining hardware down the road.

Conversely, if the selloff reflects genuine cooling in AI spending, some of that excess chip manufacturing capacity could theoretically get redirected toward crypto mining hardware, affecting hash rates, mining profitability, and ultimately the security economics of proof-of-work networks.

The more immediate concern for crypto-adjacent investors is the macro signal. Rising rate expectations hurt risk assets broadly, and crypto has increasingly traded in correlation with tech-heavy indices during periods of monetary policy uncertainty.