## [# EWY’s 10% Drop Looks More Like a Chip Selloff Than an Oil Shock](/sections/features/ewys-10-drop-looks-more-chip-selloff-oil-shock)
# EWY’s 10% Drop Looks More Like a Chip Selloff Than an Oil Shock
The South Korea ETF had surged over the past year. Tuesday’s plunge may simply reflect profit-taking across the semiconductor industry.
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[By Sumit Roy ](/authors/sumit-roy)
Mar 03, 2026
Edited by: ETF.com Staff
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The [**iShares MSCI South Korea ETF (EWY)**](/ewy) was walloped on Tuesday, falling more than 10% for its worst loss since Covid after dropping as much as 14.9% intraday. Some investors chalked the move up to the escalating conflict in the Middle East.
South Korea relies heavily on imported energy. According to the Energy Information Administration, the country imports nearly 98% of the fossil fuels it consumes due to limited domestic resources.
That dependence makes it particularly vulnerable to disruptions in global oil supply, especially with the Strait of Hormuz, a critical shipping route for crude, appearing effectively shut amid the conflict.
Japan, which faces a similar reliance on imported energy, also saw stocks fall, though by far less. The iShares MSCI Japan ETF (EWJ) dropped 3.7% on Tuesday.
Still, the oil explanation looks a bit shaky, at least when it comes to EWY’s particularly steep decline.
For one thing, the ETF had gone parabolic leading into the selloff. EWY was up as much as 56% year to date at its highs last Friday and had already surged 95% in 2025.
Much of that rally was driven by the country’s semiconductor giants. Samsung Electronics and SK Hynix together make up roughly 44% of EWY’s portfolio, and both companies have soared amid booming demand for high-bandwidth memory and other chips tied to the global AI buildout.
After a move like that, some retrenchment isn’t surprising. Not to mention, the selloff wasn’t limited to Korean chipmakers.
In the U.S., Micron, another key producer of high-bandwidth memory, fell 8% on Tuesday. SanDisk dropped 8.7%. Semiconductor equipment companies like KLA Corp. and Applied Materials were down around 6%.
Elsewhere, Dutch chipmaking equipment giant ASML lost 4.4%, while Taiwan Semiconductor Manufacturing Co. shed 4.3%.
Semiconductor ETFs were hit as well. The [**iShares Semiconductor ETF (SOXX)**](/soxx) dropped 4.9%, while the V[**anEck Semiconductor ETF (SMH)** ](/smh)fell 3.8%.
Notably, many of these names had been on massive runs leading into the week.
Meanwhile, software stocks, which had been crushed earlier this year on fears that AI could disrupt traditional software business models, caught a bid. The[ **iShares Expanded Tech-Software Sector ETF (IGV)**](/igv), which had been down more than 20% year to date, rose 1.6% on Tuesday.
Taken together, the moves suggest Tuesday’s action was more about profit-taking in semiconductor stocks and rotation into software than anything specific to South Korea’s oil dependency.
Maybe EWY’s drop opens the door to further losses. Maybe it doesn’t.
But the evidence so far points less to an oil shock story and more to a classic unwind of crowded semiconductor trades.
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[ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy)
Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including… [View Bio](/authors/sumit-roy)
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