Once a hot and soaring corner of the broader technology sector, semiconductor is now stuck in the web of woes amid U.S.-China trade showdown and waning demand for memory chips. Now, a deluge of disappointing earnings from leading chipmakers and a sell-off in the broader markets have compounded the chaos.

In fact, semiconductor stocks took a huge beating in Wednesday’s session, logging their worst day in a decade. This is especially true as most of the chipmakers fell more than 10% with the biggest drop in shares of Semtech (SMTC - Free Report), Cypress Semiconductor (CY - Free Report) and Nvidia (NVDA - Free Report).

The cautious commentary from Texas Instruments (TXN - Free Report) and STMicroelectronics (STM - Free Report) triggered the sell-off in the sector. Texas Instruments tumbled 8.2% after disappointing quarterly earnings and a lowered outlook, while STM plunged 13.8% following the signals of a slowdown in demand from China. Further, Advanced Micro Devices (AMD - Free Report) compounded the pain after missing the revenue estimates and offering weak guidance that sent its shares tumbling more than 25% in after-hours trading on Wednesday.

ETF Impact

The awful trading in the stock world also pushed the semiconductor ETF space into the red on the day. In particular, VanEck Vectors Semiconductor ETF(SMH - Free Report), Invesco Dynamic Semiconductors ETF (PSI  - Free Report), iShares PHLX Semiconductor ETF (SOXX - Free Report) and SPDR S&P Semiconductor ETF (XSD - Free Report) tumbled nearly 7% each at the close.

Below we profile these ETFs in detail and discuss some of the specifics behind their recent slump:

SMH

This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. It is heavily concentrated on the top two firms with double-digit exposure each while other firms hold less than 8.2%. The product has managed assets worth $829.7 million and charges 35 bps in annual fees and expenses.

PSI

This fund tracks the Dynamic Semiconductor Intellidex Index, holding 30 securities in the basket with none making up for more than 5.9% of assets. The product has so far amassed $204.1 million in its asset base while charges a bit higher fee of 61 bps per year from investors.

SOXX

This ETF follows the PHLX SOX Semiconductor Sector Index and offers exposure to 30 firms with each accounting for less than 10% share. It has amassed $1.4 billion in its asset base and charges 47 bps in fees a year.

XSD

This fund provides equal-weight exposure to 35 firms by tracking the S&P Semiconductor Select Industry Index. The fund has accumulated $268.6 million in AUM and charges 35 bps in fees per year.

What Lies Ahead?

With the slide, semiconductor ETFs is tracking for the worst month in nearly a decade with a month-to-date loss of 16.6% for SMH, 17.1% for PSI, 16% for SOXX and 16.5% for XSD. This has pushed the semiconductor space in the red from a year-to-date look. However, risk-tolerant investors may consider the slump as a buying opportunity, provided they have the patience for extreme volatility.

Though the year-over-year semiconductor sales growth has moderated in recent months, sales remain strong across every major semiconductor product category and regional market, with China and Americas markets standing out with the largest year-year growth in August. Per the World Semiconductor Trade Statistics (WSTS), global sales of semiconductors increased 14.9% year over year and 1.7% quarter over quarter in August.

Semiconductors are the most important drivers of overall technology growth as these are used in cars, electronic gadgets, planes and weapons. Rapid adoption of cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, artificial intelligence, cryptocurrencies, and other advanced information technologies will fuel huge growth in the space.

Additionally, the deployment of 5G (fifth-generation) technology — the next wireless revolution — will likely create further opportunities. The waves of mergers and acquisitions will also provide further impetus to the space. Trump’s tax reform is another tailwind. Big semiconductor companies hoard huge cash overseas and are poised to benefit the most from the reduced tax rates.

Moreover, the above-mentioned products have a favorable Zacks ETF Rank #3 (Hold), suggesting room for upside potential.