SG Morning Brief | Chips Fall on Positioning Not Demand, Google -4% on Gemini Delay; Netflix -9% After Hours

US OvernightThe Nasdaq fell 1.47% to 25,881.95, the S&P 500 dropped 0.51% to 7,533.77, and the Dow slipped 105.67 points (-0.20%) to 52,552.97. Technology was the worst S&P sector as the chip selloff deepened for yet another session despite TSMC posting a 77% annual earnings gain at 68% gross margins — a beat-and-raise that the market sold anyway. The Nasdaq 100 fell roughly 1.6%, touching -2% intraday. The equal-weight S&P 500 ETF gained 0.6%, confirming that the weakness is concentrated in chips and mega-cap tech, not the broad market. UnitedHealth rose 5.6% after raising its 2026 profit forecast, helping limit the Dow's decline. June retail sales missed estimates, reinforcing the consumer softening theme from PepsiCo's report last week. Reuters reported that Iran has asked Yemen's Houthi movement to stand ready to close the Red Sea oil route if the US strikes Iranian power infrastructure — a fresh escalation threat.Key MoversSOX -4%+: Marvell -8% / Credo -8% / SanDisk -12% — The semiconductor index fell over 4%, led by networking and memory names. Marvell and Credo Technology each dropped over 8%, while SanDisk plunged over 12%, extending its correction to roughly 40% from June highs. Micron fell 6%, SK Hynix ADR lost 14%, and Nvidia declined about 2%. A Stocktwits analyst captured the paradox: "TSMC just double-beat at 68% margins. ASML raised guidance. HBM is sold out through 2027. And semis are red. They're falling on positioning, not demand."Google (GOOG) -4% — Alphabet fell over 4% after reports that the release of Gemini 3.5 Pro, its flagship AI model announced at Google I/O in May, is months behind schedule. The delay raises concerns that Google is falling further behind Anthropic and OpenAI in the frontier model race. SpaceX fell over 3%, trading below its $135 IPO price again as short sellers now hold nearly one-third of the public float.TSMC (TSM) -2% — Taiwan Semiconductor fell 2.32% to $409.74 despite a stellar Q2: revenue surged to a record on AI chip demand and the company raised full-year guidance. The selloff was driven by a higher-than-expected capex forecast, which investors interpreted as margin pressure ahead. This is the third time this month a chip company beat earnings and saw its stock fall — after Samsung (-8.2%) and SK Hynix's whipsaw.After hours, Netflix (NFLX) -9% — Netflix dropped 9% in after-hours trading after Q2 revenue missed consensus and Q3 guidance came in below expectations. The results suggest that streaming growth is decelerating, particularly in mature markets.SGX PreviewThe STI was near 5,070. DBS near S$62.18, UOB near S$37.91. The chip selloff continues to pressure Asian tech. However, the equal-weight S&P gaining 0.6% while the Nasdaq fell 1.5% confirms the "healthy rotation" narrative. Singapore banks are well positioned if rate cut expectations revive further on disinflation data. The Iran-Houthi Red Sea threat is a new risk for Singapore's shipping-dependent economy.Asia Pre-MarketNetflix's 9% after-hours drop will weigh on growth stocks at Asia's open. The chip correction is now in its third week with no signs of stabilizing despite universally strong earnings (TSMC, ASML, SK Hynix HBM4, Micron — all beat). This is a positioning unwind, not a fundamental breakdown.Today's CalendarNo major US economic data or SG-relevant earnings today. Next week: ASML (July 22), Tesla (July 23), Alphabet/Intel (July 29).One More ThingTSMC beat at 68% margins. ASML raised guidance. HBM is sold out through 2027. Micron guided $50 billion. SK Hynix started mass-producing HBM4. Every single fundamental data point this month has been bullish for semiconductors. And the SOX has whipsawed relentlessly since Q2's 88% rally peaked. The disconnect between fundamentals and price action is the defining feature of July. Chips are being sold not because AI demand is slowing — it is accelerating — but because the sector rallied 88% in Q2 and positioning became too crowded. The question is when the repricing ends. Netflix's 9% after-hours drop adds another growth stock to the casualty list, but the broad market's resilience (equal-weight S&P up 0.6%) suggests this is a correction within a bull market, not the start of a bear.This briefing is for informational purposes only and does not constitute investment advice.