Bet on Top-Ranked Semiconductor ETFs Amid Surging Sales
The semiconductor market continues to witness rising sales as demand for consumer electronics like personal computers, laptops and smartphones is increasing.
The latest report from the Semiconductor Industry Association (SIA) highlights the same. The global semiconductor industry saw a 21.1% year-over-year surge in sales to $50.9 billion in April 2022. The metric also compared favorably with the March 2022 figure of $50.6 billion as it was 0.7% higher than the same. The metric might have received support from the chip companies, increasing their production capacities to manage accelerated demand amid the global chip supply shortage.
Commenting on the numbers, John Neuffer, SIA president and CEO, said that “Global semiconductor sales have increased by more than 20% on a year-to-year basis for 13 consecutive months, indicating consistently high and growing demand for semiconductors across a range of critical sectors. High global chip demand will necessitate more semiconductor research, design, and manufacturing in the years ahead, and we urge leaders in Washington to enact innovation and competitiveness legislation that ensures more of this chip production and innovation occurs on U.S. shores,” per the SIA report.
According to the SIA report, there was a 40.9% year-over-year rise in semiconductor sales in the Americas, 19.2% surge in Europe, 18.5% increase in Japan and an 18.1% rise in the Asia Pacific/All Other followed by a 13.3% jump in sales in China.
The chip market appears to have witnessed strength in the end markets like mobile phones, notebooks, servers, automotive, smart home, gaming, wearables and Wi-Fi access points, per an International Data Corporation (IDC) report.
The space has also seen accelerating demand with the growing usage of electronic vehicles along with the automobile sector becoming specifically advanced to include more electronic components in vehicles that rely on chips. The coronavirus-induced work-from-home and web-based learning trends spurred demand for chips from the PC manufacturers and data-center operators.
The growing adoption of cloud computing and the ongoing infusion of artificial intelligence, machine learning and IoT are expected to create solid opportunities in 2022. Moreover, the revolutionary 5G platform is expected to act as a major catalyst for semiconductor revenues in the mobile phone market.
Semiconductor ETFs Poised to Gain
Investors aiming to make the most of this uptrend in a diversified way could consider the following ETFs:
iShares Semiconductor ETF SOXX
iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to 30 firms. The fund has amassed $6.74 billion in its asset base. It charges 43 basis points (bps) in fees a year from investors. It sports a Zacks ETF Rank #1 (Strong Buy), with a High-risk outlook (read: 5 ETF Areas Shining Bright as US Economy Looks Strong).
VanEck Semiconductor ETF SMH
This fund provides exposure to 25 securities by tracking the MVIS US Listed Semiconductor 25 Index. The product managed assets worth $6.77 billion and charges 35 bps in annual fees and expenses. The fund currently carries a Zacks ETF Rank #1, with a High-risk outlook (read: 6 ETFs From Popular Tech Areas to Consider Now).
First Trust Nasdaq Semiconductor ETF FTXL
This fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the Nasdaq US Smart Semiconductor Index. FTXL has accumulated $79.6 million of AUM. The expense ratio is 0.60%. FTXL presently has a Zacks ETF Rank of 2 (Buy).
Invesco Dynamic Semiconductors ETF PSI
This fund tracks the Dynamic Semiconductor Intellidex Index, holding 32 securities in its basket. The product has AUM of $545.1 million. The expense ratio is 0.56%. PSI sports a Zacks ETF Rank #2 at present, with a High-risk outlook.
SPDR S&P Semiconductor ETF XSD
This fund tracks the S&P Semiconductor Select Industry Index. The fund has AUM of $990.1 million. It charges 35 bps in fees per year. The product has a Zacks ETF Rank #1 presently, with a High-risk outlook.
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