Semiconductor stocks have fallen sharply recently, but Jim Cramer said it is not a time to abandon the sector across the board.

CNBC reported on Oct. 13 that Cramer said recent selling has not reflected actual demand conditions for semiconductor companies.

The semiconductor sector has weakened for six straight sessions. The VanEck Semiconductor ETF fell 7.2 percent over the period. Cramer said rising oil prices and interest rates could extend the selling. He added that the market is trading the sector as a single block rather than focusing on individual fundamentals, obscuring demand factors that drove this year’s semiconductor rally.

Cramer cited changes on the consumer device side as a basis for his view. He said he recently visited an Apple showroom and saw devices featuring personalised Siri and more advanced smart home technology. He said such products require more computing power and memory, which could translate into additional demand for chipmakers. Cramer said investors should go to a showroom to see where chips are used before rushing to exit because semiconductor stocks are hard to hold, and that they should look at real devices rather than a semiconductor index.

He cited Micron as a representative example. Cramer said Micron has become one of the main beneficiaries of expanding artificial intelligence infrastructure and that demand for memory chips is far outstripping supply. He emphasised that Micron has secured 26 long-term customer contracts that cover about 35 percent of revenue through 2030, and that volume negotiations for 2031 are already under way. He said the contracts require customers to meet financial obligations, improving visibility on Micron’s future revenue. "If Micron didn’t have these kinds of contracts, I would have been worried," he said.

He also said the demand case is not limited to memory chips. Cramer mentioned Intel and AMD, noting that the two companies make central processing units, a basic component in virtually all devices. He said this shows chip demand is linked to broad device proliferation rather than concentrated in a particular theme or a handful of stocks.

Cramer said semiconductor stocks could still fall further, acknowledging they are correcting after big gains. "Because these stocks have risen so much, it is reasonable to expect a sharp pullback," he said. Still, he added that looking at the spread of real devices and growing use cases helps explain why shares of Micron, Intel and AMD rose.

He also mentioned that leveraged hedge fund money has helped inflate gains in some stocks. But Cramer drew a line at attributing the rise solely to speculative flows. "A substantial part is pure demand," he said.

Cramer’s view is that the decline in semiconductor stocks reflects the combination of macro factors and broad sector selling, but it is hard to say that company-by-company earnings foundations and long-term demand have also collapsed at the same time. The market is expected to watch oil prices and interest rates for now, while also focusing on how much expanding AI investment and more advanced consumer devices continue to support actual semiconductor demand.