5 Best Semiconductor ETFs

In this article, we discuss 5 best semiconductor ETFs. If you want to read our discussion on the semiconductor industry, head directly to 10 Best Semiconductor ETFs. 

5. SPDR S&P Semiconductor ETF (NYSE:XSD)

5-year Share Price Performance as of March 13: 192.21%

SPDR S&P Semiconductor ETF (NYSE:XSD) aims to replicate the total return performance of the S&P Semiconductor Select Industry Index. It provides exposure to the semiconductor segment of the S&P Total Market Index by tracking a modified equal weighted index, offering diversified industry exposure across large, mid, and small-cap stocks. Established on January 31, 2006, SPDR S&P Semiconductor ETF (NYSE:XSD) has an expense ratio of 0.35% and holds a portfolio of 39 stocks as of March 13, 2024. It is one of the best semiconductor ETFs to buy. 

Impinj, Inc. (NASDAQ:PI) is one of the largest holdings of SPDR S&P Semiconductor ETF (NYSE:XSD). The company operates a cloud connectivity platform globally, connecting items wirelessly and providing data to business and consumer applications. On February 8, Impinj, Inc. (NASDAQ:PI) reported a Q4 non-GAAP EPS of $0.09 and a revenue of $70.7 million, outperforming Wall Street estimates by $0.08 and $1.07 million, respectively. 

According to Insider Monkey’s fourth quarter database, 16 hedge funds were bullish on Impinj, Inc. (NASDAQ:PI), compared to 24 in the prior quarter. Israel Englander’s Millennium Management is the leading stakeholder of the company, with 493,809 shares worth $44.45 million. 

Wasatch Micro Cap Value Strategy stated the following regarding Impinj, Inc. (NASDAQ:PI) in its fourth quarter 2023 investor letter:

“Another strong contributor was Impinj, Inc. (NASDAQ:PI). The company, a pioneer in helping develop the “Internet of Things,” provides an infrastructure by which everyday things—such as car parts and even shipping containers— communicate over the internet. Impinj deploys wireless inventory management and tracking platforms for customers in retail, manufacturing, health care and other areas. The company also provides tiny radio-frequency identification chips to connect, count and track individual items. Earlier in the year, the stock fell due to a slowdown in platform deployments and chip orders. The slowdown occurred because customers had previously obtained extra inventory based on fears over Covid-related supply-chain disruptions. However, the stock rebounded after a report of solid third-quarter revenues and profitability that exceeded expectations. Moreover, management expressed optimism that Impinj’s long-term business opportunities remain intact.”

4. Invesco Semiconductors ETF (NYSE:PSI)

5-year Share Price Performance as of March 13: 213.01%

Invesco Semiconductors ETF (NYSE:PSI) tracks the performance of the Dynamic Semiconductor Intellidex Index, aiming to invest at least 90% of its assets in common stocks from the index. Established on June 23, 2005, Invesco Semiconductors ETF (NYSE:PSI) holds a portfolio of 31 stocks as of March 13, 2024, with an expense ratio of 0.57%. Invesco Semiconductors ETF (NYSE:PSI) is one of the best semiconductor ETFs to buy. 

Micron Technology, Inc. (NASDAQ:MU) is one of the top holdings of Invesco Semiconductors ETF (NYSE:PSI). Stifel upgraded Micron Technology, Inc. (NASDAQ:MU) on March 7, highlighting discrepancies in consensus estimates for 2025 as “well wrong and too low.” Analyst Brian Chin noted tightening supply in dynamic random access memory (DRAM) and predicted a recovery into the mid-90s percentile by mid-year. Consequently, Chin raised Micron’s rating to Buy from Hold and increased the price target on the shares from $80 to $120.

According to Insider Monkey’s fourth quarter database, 92 hedge funds were bullish on Micron Technology, Inc. (NASDAQ:MU), compared to 90 funds in the last quarter. 

3. iShares Semiconductor ETF (NASDAQ:SOXX)

5-year Share Price Performance as of March 13: 263.85%

iShares Semiconductor ETF (NASDAQ:SOXX) aims to replicate the performance of the NYSE Semiconductor Index, consisting of US-listed equities in the semiconductor sector. It provides focused exposure to companies involved in designing, manufacturing, and distributing semiconductors. With an expense ratio of 0.35% and net assets surpassing $13 billion as of March 13, 2024, iShares Semiconductor ETF (NASDAQ:SOXX) is one of the best semiconductor ETFs. The fund holds a portfolio consisting of 30 stocks. 

Intel Corporation (NASDAQ:INTC) is one of the biggest holdings of the iShares Semiconductor ETF (NASDAQ:SOXX). On January 25, Intel Corporation (NASDAQ:INTC) reported a Q4 non-GAAP EPS of $0.54 and a revenue of $15.4 billion, exceeding Wall Street consensus by $0.09 and $230 million, respectively. 

According to Insider Monkey’s fourth quarter database, 86 hedge funds were bullish on Intel Corporation (NASDAQ:INTC), compared to 70 funds in the previous quarter. 

Upslope Capital Management stated the following regarding Intel Corporation (NASDAQ:INTC) in its fourth quarter 2023 investor letter:

“Intel Corporation (NASDAQ:INTC) – New Long: This is not a traditional long for Upslope in any sense. Intel is outside of the box in terms of typical sector and market cap focus, and the position is really a portfolio hedge (and structured as such). The thesis is very simple: Intel is uniquely positioned to benefit in two important scenarios, both of which require “protection” for Upslope’s portfolio: a continued melt-up in technology stocks and/or rising tensions over Taiwan. Combined with expectations and sentiment around Intel that were incredibly low, this nudged me to add exposure via long-dated INTC call options. While still material in terms of delta-adjusted exposure, the position has been reduced repeatedly and is much more modest today.”

2. VanEck Semiconductor ETF (NASDAQ:SMH)

5-year Share Price Performance as of March 13: 329.24%

VanEck Semiconductor ETF (NASDAQ:SMH) aims to replicate the price and yield performance of the MVIS® US Listed Semiconductor 25 Index. This index is designed to monitor the overall performance of companies engaged in semiconductor manufacturing and equipment. As of March 12, 2024, VanEck Semiconductor ETF (NASDAQ:SMH)’s net assets amount to $18.07 billion, along with an expense ratio of 0.35%. The ETF was established on December 20, 2011. It is one of the best semiconductor ETFs to invest in. 

ASML Holding N.V. (NASDAQ:ASML) is one of the top holdings of VanEck Semiconductor ETF (NASDAQ:SMH). ASML Holding N.V. (NASDAQ:ASML) saw increased demand from China in 2023, but future gains might be impacted by potential domestic substitutions, according to Bernstein Research. Despite this, Bernstein anticipates a 3% growth in the wafer fab equipment market to $97 billion in 2024, partly due to delays in capital expenditures by Taiwan Semiconductor Manufacturing. Bernstein raised its price target on ASML Holding N.V. (NASDAQ:ASML) to $1,072 from $963 and maintained an Outperform rating on the stock on March 11. 

According to Insider Monkey’s fourth quarter database, 62 hedge funds were bullish on ASML Holding N.V. (NASDAQ:ASML), compared to 57 funds in the prior quarter. 

Polen International Growth Strategy stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:

“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”

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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