The semiconductor sector experienced a swift downturn at the start of 2024, just a day after achieving its highest yearly gain in two decades. The VanEck Semiconductor ETF, comprising 25 equity components, plummeted by 3.3% during afternoon trading, as all its constituents traded lower.

The ETF witnessed a remarkable surge of 72.3% in 2023, making it the best performing year for the ETF since its record-breaking rally of 87.3% in 2003. However, this euphoria was short-lived as the sector faced widespread selling pressure on Tuesday.

One of the major decliners on Tuesday was Advanced Micro Devices Inc., whose shares tumbled by 6.1%. Similarly, Intel's stock took a 4.8% hit after experiencing an impressive 90.1% surge in 2023, making it the stock's best performing year since its remarkable growth of 105.8% in 2003.

On the other hand, ASML Holding N.V., a company listed in the U.S., witnessed positive growth in 2023. The stock of ASML Holding N.V. demonstrated a robust performance, while Nvidia Corp.'s stock experienced a phenomenal 238.9% surge, marking its best year since the record rally of 308.4% in 2001. However, on Tuesday, Nvidia's stock suffered a 2.8% decline during afternoon trading.

The semiconductor sector's downturn at the beginning of 2024 suggests a level of volatility and uncertainty in the market. Investors are closely monitoring the performance of major players in the industry, such as Advanced Micro Devices Inc., Intel, ASML Holding N.V., and Nvidia Corp., as their stocks play a crucial role in determining the sector's overall performance.

The semiconductor sector is renowned for its cyclical nature, and the recent selloff serves as a reminder that even after a period of immense growth, setbacks can occur. Analysts are now assessing the reasons behind the decline, with some attributing it to profit-taking following the remarkable gains of 2023.

As the year unfolds, market participants will continue to monitor the semiconductor sector closely. The industry's performance will be indicative of the broader market sentiment and could provide insights into the stability of the current economic landscape.