Semiconductor stocks just had their worst week since 2020 — but it wasn't all their fault

Employees work on the production line of silicon wafer at a factory in Jiaxing City, China.

• Semiconductor stocks erased as much as $1.3 trillion in market cap as markets digested a host of news
• While stocks recovered mildly on Monday, they sold off again on Tuesday and Wednesday, highlighting growing concerns amongst investors of an overheated market underpinned by external factors
• Demand for chips remains strong, but a host of external factors and investors remaining skittish about the AI narrative may have tipped the scales considerably for many

Chip stocks have had an impressive run over the past few years, driven by red-hot industry demand, ever-increasing demand forecasts, and increasingly expensive and labyrinthine designs.