What Happened?
A number of stocks fell in the afternoon session after concerns were raised about potential supply chain disruptions for key chipmaking materials due to the conflict in the Middle East.
South Korean officials highlighted the risk, noting that the ongoing conflict could interrupt the supply of essential materials, such as helium, which are sourced from the region. Helium plays a critical role in managing heat during the semiconductor manufacturing process, and there are currently no viable substitutes. The potential for a prolonged conflict has also raised fears of higher energy costs and prices, which could create a bottleneck in the production of memory chips, a crucial component for a vast array of electronic devices and AI technologies.
Separately, reports surfaced that the U.S. was considering new restrictions on artificial intelligence (AI) chip sales. The news indicated that officials drafted regulations that would require American approval to restrict AI chip shipments globally. This development triggered a rout among chipmakers, with the S&P 500 losing 1.3% and major companies like Nvidia seeing their shares sink.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Analog Semiconductors company MACOM (NASDAQ: MTSI) fell 4.9%. Is now the time to buy MACOM? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Photronics (NASDAQ: PLAB) fell 7.3%. Is now the time to buy Photronics? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company FormFactor (NASDAQ: FORM) fell 7.8%. Is now the time to buy FormFactor? Access our full analysis report here, it’s free.
- Analog Semiconductors company Vishay Intertechnology (NYSE: VSH) fell 5.3%. Is now the time to buy Vishay Intertechnology? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Kulicke and Soffa (NASDAQ: KLIC) fell 6.3%. Is now the time to buy Kulicke and Soffa? Access our full analysis report here, it’s free.
Zooming In On FormFactor (FORM)
FormFactor’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 6.2% on the news that fears of a global energy price shock hit the semiconductor sector following a sell-off in South Korea's stock market.
The drop in South Korea's KOSPI index was triggered by fears related to an Iran conflict, which sparked concerns about a major price shock for liquefied natural gas (LNG). South Korea is one of the world's largest importers of LNG, so a sustained surge in energy prices could directly increase operating costs and squeeze profits for the country's semiconductor manufacturers.
Major chipmakers like Samsung Electronics and SK Hynix, which dominate the global memory chip supply, saw their stocks fall significantly. This negative sentiment spread to U.S. markets, affecting related semiconductor companies.
FormFactor is up 45.5% since the beginning of the year, but at $86.11 per share, it is still trading 18.6% below its 52-week high of $105.83 from February 2026. Investors who bought $1,000 worth of FormFactor’s shares 5 years ago would now be looking at an investment worth $2,006.
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