Why Direxion Daily Semiconductor Bull ETF (SOXL) Is Trading Lower

Direxion Daily Semiconductor Bull 3X Shares SOXL shares are trading lower by 4.64% to $23.24 Wednesday morning. The ETF is falling amid reports of the U.S. planning to revise its export controls on AI chips to limit China's access to advanced technologies with military applications.

What Else?

Per a report by the Wall Street Journal, the Biden administration is considering new restrictions on AI chip exports to China and other countries of concern.

The Commerce Department may require a license for chip shipments made by companies like NVIDIA Corp NVDA. These potential measures expand upon existing export control rules. Per the Wall Street Journal, the Commerce Department has not yet responded to requests for comment.

If the export restrictions are implemented, it could disrupt the supply chain for AI chips, particularly for companies like Nvidia and other chip-makers that export to China. This disruption may lead to decreased revenue and earnings for these companies, which could in turn negatively affect the overall performance of the semiconductor sector.

As a leveraged ETF that seeks to amplify the daily returns of the underlying index, any negative impact on the semiconductor sector could result in amplified losses for SOXL.

According to data from Benzinga Pro, SOXL has a 52-week high of $26.79 and a 52-week low of $6.21.