Direxion Daily Semiconductors Bull 3x Shares (SOXL) experienced a significant drop of 6.69% in pre-market trading on Friday, reflecting broader weakness in the semiconductor sector. This sharp decline comes as chip stocks across the board faced selling pressure, with several major players in the industry seeing notable losses.

The semiconductor industry was hit particularly hard, with Marvell Technology falling over 6%, Advanced Micro Devices (AMD) and Micron Technology both down more than 3%, and industry giants like Nvidia, Super Micro Computer (SMCI), and Intel all declining by over 2%. SOXL, being a leveraged ETF that aims to deliver three times the daily performance of the ICE Semiconductor Index, saw an amplified negative movement in line with the sector's downturn.

The steep decline in chip stocks appears to be largely driven by concerns over new tariffs imposed by U.S. President Donald Trump. In a sweeping move, Trump announced steep tariffs on exports from numerous trading partners, including Canada, Brazil, India, and Switzerland, just ahead of a crucial trade deal deadline. These new tariffs, ranging from 10% to 50% on various goods, are set to take effect within a week. The semiconductor industry, which relies heavily on global supply chains and international trade, could be significantly impacted by these tariff increases, potentially leading to higher costs and disrupted supply chains. As investors digest the implications of these trade policy changes, the semiconductor sector may continue to face volatility in the near term.