Supply chain could ‘freeze up’ — Analysts sound alarm on leveraged chip ETFs like SOXL

Leveraged bets on semiconductor stocks have been among the worst investments of 2025, and analysts warn the bloodbath may just be getting started.

The Direxion Daily Semiconductor Bull 3X Shares (SOXL) — which offers triple-leveraged exposure to chip stocks — dropped another 5.3% to start the week, trading at $8.71.

SOXL is now down more than 68% year-to-date, and its net assets have shrunk to just $7 billion.

Meanwhile, traders who went short using Direxion’s inverse fund SOXS are sitting on gains of more than 23% so far in 2025. At the peak of the tariff-fueled crash in early April, SOXS was up more than 113%.

As InvestorsObserver reported on April 4, chip stocks are plunging despite being exempt from tariffs under the Trump administration — part of a strategy to keep semiconductor supply flowing to U.S. companies.

Despite the exception, chipmakers are highly dependent on Nvidia (NVDA), whose exports to China were recently blacklisted by the U.S. government.

Economists are also growing more confident (worringly) in their recession calls, flagging chipmakers as one of the biggest potential casualties if a downturn hits.

Chipmakers could be staring into the abyss if recession hits

Earlier this month, Citibank analysts warned that the risk of a recession triggered by tariffs poses a bigger threat to semiconductors than the tariffs themselves.

“We believe the biggest risk to the [semiconductor] sector is a recession resulting from tariffs,” the Citi team wrote.

“If the tariffs continue for another month, we believe there’s a high likelihood the supply chain will ‘freeze up’ due to mounting uncertainty, sharply reduced order rates, and inventory cutbacks.

Their warning specifically called out the SOX Index, which the Direxion funds track.

Over at Apollo Global Management, analysts now peg the odds of a “voluntary” recession this year at 90%, blaming what they call poor implementation of tariff policy under the Trump administration.

Big banks — including Morgan Stanley, JPMorgan, Bank of America, and Goldman Sachs — see the odds of a recession as a coin toss as of April.

Meanwhile, the Atlanta Fed’s GDPNow model is sounding the alarm with a projection of a 2.3% contraction in Q1 GDP — an abrupt slowdown for the U.S. economy.