Direxion Daily Semiconductors Bull 3x Shares (SOXL) plummeted 10.59% early in the session on Monday, as the leveraged semiconductor exchange-traded fund faced intense selling pressure.

The sharp decline was driven by a confluence of factors leading to a broad sell-off in the semiconductor sector. Extreme crowdedness had built up after semiconductor-themed ETFs attracted record net inflows exceeding 100 billion yuan over the past 15 trading days, pushing trading volume and fund shares to all-time highs. This overextended positioning triggered concentrated profit-taking, amplified by the unwinding of the popular tech strategy of buying chip stocks while selling software stocks. Concurrently, hedge funds have been net sellers of chip hardware stocks for several consecutive weeks.

Further pressure stemmed from profit-taking in key semiconductor names, notably SK Hynix, which dropped sharply after its high-profile Nasdaq debut as investors locked in gains. Easing optimism regarding near-term earnings for chip companies, particularly for high-bandwidth memory shipments, also contributed to the negative sentiment. As a triple-leveraged product designed to deliver three times the daily return of the Philadelphia Semiconductor Index, SOXL's structure magnified the underlying sector's losses during this period of market stress.