European Chip Stocks Tumble, Tracking Heavy Losses in U.S. Sector

European semiconductor stocks experienced a sharp downturn on Friday, following a significant selloff among their U.S. peers that pulled down major technology indices.

Widespread European Declines

The selloff was broad-based across the continent's chip and chip-equipment manufacturing sector. By mid-morning, shares of major European semiconductor firms had posted significant losses, according to market data from Investing.com.

Key decliners included:

• AMS-Osram: down 10%
• STMicroelectronics: declined 7.6%
• Aixtron: shed 7.4%
• Siltronic: dropped 7.2%
• Soitec: lost 7.1%
• Dutch equipment makers ASML and ASM International: fell approximately 6% each

U.S. Selloff Sets the Tone

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The negative sentiment carried over from Thursday's trading session in the United States, where the Philadelphia SE Semiconductor Index (SOX), a key benchmark for the industry, plummeted 4.3%. The weakness in chip stocks was a primary driver in pulling down the tech-heavy Nasdaq 100 by 1.6% and the broader S&P 500 by 0.5%.

In the U.S., memory-chip manufacturers were among the most affected. Companies including Western Digital and Seagate Technology saw steep declines, with the group falling between 5.8% and 12.6%, as reported by Investing.com.

Context and Investor Sentiment

The downturn came despite some otherwise positive market signals, suggesting a potential shift in investor sentiment for a sector that has rallied significantly this year. The selloff persisted even after TSMC, the world's largest contract chipmaker, reported a 77% jump in quarterly profit.

Despite the strong results, TSMC's U.S.-listed shares still closed down 2.3% on Thursday. This reaction underscores the extremely high expectations that have been priced into the sector, which may be prompting investors to take profits after a period of substantial gains.