U.S. Semiconductor ETFs Plunge Over 19% as Leverage Unwinds on June 23, Spreading to SK Hynix

According to Benzinga, U.S. semiconductor ETFs tumbled sharply on Tuesday (June 23), with Direxion Daily Semiconductor Bull 3x ETF (SOXL) losing nearly 20% in premarket trading and VanEck Semiconductor ETF (SMH) falling roughly 6% in early trading. The selloff reflects forced deleveraging in highly leveraged positions rather than fundamental deterioration; these ETFs use derivatives to provide triple daily returns of the PHLX Semiconductor Index, requiring daily rebalancing that forces asset sales during market downturns.

The weakness spread to South Korea, where the Kospi index dropped approximately 10% overnight after regulatory warnings about overheated leveraged chip ETFs. One product, Csop SK Hynix Daily 2x Leverage ETF, fell 23.8%. The ripple effect reached U.S. peers: Micron Technology declined roughly 9%, and Sandisk fell about 10%. According to Oppenheimer analysts, the scale of Korean leveraged chip ETF positioning relative to the local market would be equivalent to a $750 billion single-stock leverage ETF on the U.S. market, illustrating how vulnerable these structures are to sudden reversals.