AMD, Arm, Qualcomm Plunge Up to 17% as Semiconductor Index Crashes 9.7%

The Quick Take

• Semiconductor index dropped 9.7% as AMD, Sandisk, Micron, and Arm fell heavily on AI data center spending concerns
• Qualcomm and Arm disappointed with forecasts, compounding worries about potential restrictions on AI infrastructure
• Nasdaq declined 6% overall as the chip selloff extended broader tech market losses for a second consecutive day

The semiconductor sector experienced one of its most severe single-day declines in recent years, with the Philadelphia Semiconductor Index dropping 9.7% as cascading warnings from Qualcomm and Arm Holdings intensified existing concerns about AI data center spending. AMD, Sandisk, and Micron joined the rout with declines up to 17%, reflecting broad sector contagion beyond the specific companies that issued disappointing guidance. The Nasdaq's 6% decline confirmed that semiconductor stocks were the epicenter of a broader technology market correction driven by deteriorating AI spending visibility.

India's IT and technology ecosystem has deep exposure to the US semiconductor supply chain, with component makers, EMS firms, and software companies serving hyperscaler clients directly dependent on chip sector health. A 9.7% semiconductor index decline signals potential capital expenditure cuts at the data center build-outs that sustain demand for Indian software testing, cloud migration, and embedded engineering services. Indian semiconductor design firms and startups in the chip design segment face funding pressure as venture capital reallocates away from the sector during risk-off periods, and FII selling in India's tech indices will likely follow.

Monitor Qualcomm and Arm's formal guidance revisions at their next analyst days, as these will set the demand template for the entire AI infrastructure supply chain. Upcoming data on US AI data center construction permits and hyperscaler capital expenditure filings will signal whether the spending slowdown is a temporary pause or a structural shift. The key macro variable is whether US regulatory policy on AI data center energy usage—which the Democrats' midterm win placed on the legislative agenda—translates into concrete restrictions within the next Congressional session.

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