Chip stock sell-off deepens as TSMC outlook fails to calm markets

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US equity futures are mixed in Thursday's pre-market trading as chip stocks continue to sell off, triggered by Taiwan Semiconductor Manufacturing Company's failure to impress Wall Street despite robust earnings and a raised outlook. TSMC now expects capital expenditure of 60 to 64 billion dollars this year, at least 4 billion higher than its prior forecast, while ASML also talked about increasing capacity. The sell-off has been exacerbated by a feedback loop between US and Korean markets, particularly after SK Hynix's US debut last week, with its shares falling in Korea and then in the US. Analysts point to the impact of leveraged exchange-traded funds in Korea, which have seen 55 curb trading incidents and seven outright stops this year, contributing to heightened volatility. The disconnect between strong fundamental demand signals from chipmakers and the speculative trading dynamics is creating a 'chicken or the egg' situation for investors.