Semiconductor ETF inflows

What happened: Semiconductor ETFs, such as SOXX, SMH, and DRAM, surged in May, driven by industry-wide shortages and strong performances from key components like Micron and AMD. Broadcom's report tested the semiconductor rally's limits. The First Trust Nasdaq Semiconductor ETF benefited from Micron's ascent, while the VanEck Semiconductor ETF (SMH) gained over 60% since late March, making it the top sector performer. However, hedge fund manager Leopold Aschenbrenner took a bearish stance on SMH.

Market impact: The semiconductor industry's rally pushed chip stocks higher, with ETFs like SOXX, SMH, and DRAM leading the charge. This trend positively affected companies with significant exposure to semiconductor stocks, such as Micron and AMD. Meanwhile, the broad market indexes surged, with semiconductors leading the way. The Roundhill Memory ETF (DRAM) outperformed SOXX, driven by AI-accelerator demand and tight memory supplies.

What to watch next: Investors should closely monitor Micron's earnings, scheduled for late June, as it's a significant component in many semiconductor ETFs. Additionally, the 200-day moving average for SOXX will be a crucial technical level to watch, as it could indicate a potential trend reversal. Lastly, keep an eye on South Korean memory chip producers like SK Hynix and Samsung, as their performance could drive the iShares MSCI South Korea ETF (EWY) and, consequently, the broader semiconductor market.