Grab These Top-Ranked Chip ETFs Amid Rising Sales
The semiconductor market has witnessed accelerated sales amid the pandemic. The strength in the space has emerged from the rising demand for consumer electronics like personal computers, laptops and smartphones.
The latest report from the Semiconductor Industry Association (SIA) highlights the same. The global semiconductor industry saw a 26.2% year-over-year surge in sales to $555.9 billion in 2021, the highest-ever annual total. A record 1.15 trillion semiconductor units were shipped in 2021. This impressive figure is a result of the chip companies increasing their production capacities to manage surging demand amid the global chip supply shortage.
Not only were the numbers for 2021 encouraging but sales in December also remained strong. The metric rose 28.3% over the prior year and totaled $50.9 billion. Commenting on the numbers, John Neuffer, SIA president and CEO, said that “In 2021, amid the ongoing global chip shortage, semiconductor companies substantially ramped up production to unprecedented levels to address persistently high demand, resulting in record chip sales and units shipped,” per the SIA report.
Neuffer also believes that the demand for semiconductors can remain strong and rise in the near term as the requirement for embedding chips in technologies is increasing. He also reportedly mentioned that “To ensure more semiconductor production and innovation is located in America over the long term, the U.S. government must swiftly fund CHIPS Act investments in semiconductor research, design, and manufacturing as part of bipartisan competitiveness legislation. Doing so will greatly strengthen America’s economy, national security, critical infrastructure, supply chains, and tech leadership.”
Notably, the chip market has 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 PC manufacturers and data-center operators.
A report by trade credit insurer Euler Hermes projects the semiconductor space, which saw sales rising 26% to $553 billion in 2021, to witness another 9% rise in sales and surpass the $600-billion mark for the first time in 2022. In this regard, analysts at Euler Hermes commented that “The current semiconductor cycle has been firing on all cylinders since the industry emerged from its worst recession in 2019,” per a CNBC article.
Semiconductor ETFs Poised to Gain
The growing adoption of cloud computing and the ongoing infusion of artificial intelligence and machine learning 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.
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 $8.98 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: ETFs to Gain on Intel's Buyout of Tower Semiconductor).
VanEck Semiconductor ETF SMH
This fund provides exposure to 24 securities by tracking the MVIS US Listed Semiconductor 25 Index. The product managed assets worth $8.84 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: Top-Ranked ETFs to Bet on Amid the Russia-Ukraine Crisis).
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 $105.7 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 33 securities in its basket. The product has AUM of $819 million. The expense ratio is 0.56%. PSI sports a Zacks ETF Rank #1 at present, with a High-risk outlook (read: Be Choosy In Tech Investing: ETFs to Buy/Sell).
SPDR S&P Semiconductor ETF XSD
This fund tracks the S&P Semiconductor Select Industry Index. The fund has AUM of $1.30 billion. It charges 35 bps in fees per year. The product has a Zacks ETF Rank #1 presently, with a High-risk outlook (read: 5 Top-Ranked Tech ETFs to Buy at Bargain Price).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
VanEck Semiconductor ETF (SMH): ETF Research Reports
iShares Semiconductor ETF (SOXX): ETF Research Reports
SPDR S&P Semiconductor ETF (XSD): ETF Research Reports
First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
