What Happened?
A number of stocks fell in the afternoon session after a broad-based sell-off hit the semiconductor sector following news of a potential strike at Samsung and a stake sale by Taiwan Semiconductor Manufacturing (TSMC), which rattled global chip supply chains.
These events highlighted significant supply-chain risks, triggering a sharp reversal across the chip industry. Adding to the sector's weakness were rising valuation concerns, inflation fears, and broader market jitters that led to renewed selling pressure on major companies like NVIDIA, Intel, and Micron Technology.
Furthermore, ongoing supply constraints for rare earth materials, which are used in semiconductor manufacturing, reportedly caused delays and higher input costs for firms in the sector, compounding the negative sentiment for chip-related stocks.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Memory Semiconductors company Seagate (NASDAQ: STX) fell 8.3%. Is now the time to buy Seagate? Access our full analysis report here, it’s free.
- Analog Semiconductors company Power Integrations (NASDAQ: POWI) fell 9.3%. Is now the time to buy Power Integrations? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company FormFactor (NASDAQ: FORM) fell 7.7%. Is now the time to buy FormFactor? Access our full analysis report here, it’s free.
Zooming In On Power Integrations (POWI)
Power Integrations’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 1% as the semiconductor sector rose buoyed by robust AI-related demand and a strong global sales outlook.
Global semiconductor sales are on a significant upward trend, projected to surpass $1 trillion this year, largely driven by widespread AI infrastructure and data-center needs. This surge in demand is already translating into tangible results for companies in the sector.
For instance, ChipMOS reported a 32.2% year-over-year revenue increase for April, citing a 'persistent AI-related demand/supply imbalance.' Further underscoring the industry's expansion, companies like Advanced Semiconductor Engineering are collaborating to build new state-of-the-art manufacturing facilities to meet the growing needs for high-performance computing (HPC) chips, which are essential for powering advanced AI applications.
Power Integrations is up 76.2% since the beginning of the year, but at $65.74 per share, it is still trading 16% below its 52-week high of $78.23 from May 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Power Integrations’s shares 5 years ago would now be looking at only $879.23.
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