5 Best Semiconductor ETFs

1. ProShares Ultra Semiconductors (NYSE:USD)

5-year Share Price Performance as of March 13: 880.12%

ProShares Ultra Semiconductors (NYSE:USD) aims to achieve daily investment results, before fees and expenses, that are double (2x) the daily performance of the Dow Jones U.S. SemiconductorsSM Index. Established on January 1, 2007, the ETF offers a net expense ratio of 0.95% as of March 12, 2024. ProShares Ultra Semiconductors (NYSE:USD) is one of the best semiconductor ETFs. 

Applied Materials, Inc. (NASDAQ:AMAT) is one of the top holdings of ProShares Ultra Semiconductors (NYSE:USD). On March 11, Applied Materials, Inc. (NASDAQ:AMAT) declared a $0.40 per share quarterly dividend, a 25% increase from its prior dividend of $0.32. The dividend is payable on June 13, to shareholders on record as of May 23. 

According to Insider Monkey’s fourth quarter database, 70 hedge funds were long Applied Materials, Inc. (NASDAQ:AMAT), compared to 68 funds in the prior quarter. David Blood and Al Gore’s Generation Investment Management is the leading stakeholder of the company, with 7.35 million shares worth $1.2 billion. 

Generation Investment Management made the following comment about Applied Materials, Inc. (NASDAQ:AMAT) in its Q2 2023 investor letter:

Applied Materials, Inc. (NASDAQ:AMAT): Semiconductor revenue has grown 6% per year since 2010, driven by increasing demand for smartphones, data centres and electronic content in vehicles and industrial settings.4 Through work spanning six roadmaps covering many sub-themes within semiconductors (including industry consolidation, capital equipment and generative AI), we are confident that these trends will continue or even accelerate in the coming decades. The rise of generative AI in particular will require high-performing semiconductors, such as Nvidia’s GPUs, in data centres.

Traditionally the industry relied on semiconductor manufacturers to deliver steady advances in semiconductor performance while reducing costs. This phenomenon is known as Moore’s Law, which was identified by Intel founder Gordon Moore. Traditionally, Moore’s Law relied on shrinking the light source used to expose photosensitive material on a silicon wafer to make smaller semiconductors, which in turn led to falling costs.

In recent years, however, Moore’s Law has slowed. Manufacturing has run up against the limits of physics. Making semiconductors smaller more cheaply has therefore become difficult. The latest generation of lithography machines that create this light source are marvels of modern science, but they are also expensive to produce, not to mention power-hungry. Delivering performance improvements in the most advanced semiconductors is now becoming costlier. This presents a risk, both to generative AI and a net zero world.

All is not lost, however. The semiconductor industry attracts some of the best minds in the world, many of whom are looking at alternative ways to continue to deliver more power-efficient and cheaper semiconductors. A key area of focus is around developing new materials used in manufacturing semiconductors, and new ways of applying (‘deposition’) and selectively removing (‘etch’) these materials to create the desired semiconductor. Applied Materials is one of the companies in the vanguard of these developments…” (Click here to read the full text)

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