Best Semiconductor ETFs for 2024

Jitanchandra Solanki
10 Min read

The semiconductor industry continues to grow as the world develops from a technology standpoint. Semiconductor companies are key players in the supply chains of computation-capable electronic devices. What exactly are semiconductor ETFs and why investors may consider investing in them are explained in this article. A list of the best semiconductors ETFs UK is also provided.

Key Takeaways

  • Semiconductors are materials such as silicon, which can conduct electricity better than insulators but not as well as metals like copper. They are crucial ingredients for any device that has a computer chip.
  • Semiconductor sales are expected to total slightly over $515 billion in 2024, which is 50% higher than the roughly $370 billion sales in 2016. The industry is projected to grow to $730 billion by 2027.
  • Semiconductor ETFs are Exchange Traded Funds that buy into many semiconductor-related companies. Investors can invest in the ETF to receive broad exposure to the semiconductor industry and its performance.

What are Semiconductor ETFs?

Semiconductor ETFs are Exchange-Traded Funds that invest in companies that deal directly with semiconductors. Semiconductors are materials that can conduct electricity, but not as well as full conductors like metals such as copper. Semiconductors are crucial components of integrated circuits, which are used to make computing chips for telephones, computers, and all kinds of electronic devices.

As the world increasingly integrates with technology and computer devices of all kinds, semiconductor companies are in a unique position. They find themselves near the start of the supply chain of an important industry expected to grow in the coming years.

Semiconductor ETFs are traded like shares on stock exchanges. They can be bought and sold in single transactions, allowing investors to buy many semiconductor-related equities simultaneously.

Best Semiconductor ETFs to Watch

Whichever is the best semiconductor ETF will always be a subjective question. Each investor’s personal situation is an essential factor for the viability of any investment. Not to mention that every portfolio is different.

The best semiconductor ETFs UK mentioned below should be a starting point for investors performing their own research before committing to any investment.

  1. VanEck Vectors Semiconductor ETF – Europe’s First Semiconductor Exchange Traded Fund
  2. iShares PHLX Semiconductor ETF – Leading Semiconductor Companies from the United States

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VanEck Vectors Semiconductor ETF

The VanEck Vectors Semiconductor ETF was one of the first semiconductor ETFs released in Europe. The focus of this fund lies completely with companies in the semiconductor space and meets the criteria of deriving at least 50% of their revenue from semiconductors or related activities.

There are also several exclusion criteria for the VanEck Vectors Semiconductor ETF: companies that severely violate UN Global Compact Principles or derive any revenue from controversial weapons, according to ISS data. Similarly, companies that earn more than 5% of their revenue from sectors including (but not limited to) fossil fuels, civilian firearms, military equipment, tobacco, or nuclear power are excluded.

The VanEck Vectors Semiconductor ETF holds 25 different equities and is fully invested in the stock market, holding only a marginal amount of cash. The net assets of this fund comprise $1.2 billion.

The top 10 holdings of the VanEck Vectors Semiconductor ETF in order include: Broadcom Inc (~10.2%), Taiwan Semiconductor Manufacturing Co L (~10.1%), ASML Holding NV (~9.8%), NVIDIA Corp (~9.5%), Advanced Micro Devices Inc (~7.9%), Intel Corp (~7.5%), Qualcomm Inc (~5.7%), Texas Instruments Inc (~5.5%), Applied Materials Inc (~4.6%), and Lam Research Corp (~3.8%).

As the VanEck Vectors Semiconductor ETF specifically targets companies that derive at least 50% of their revenue from semiconductors and related activities, 99.9% of the fund’s capital is allocated to the information technology sector.

With Admirals, you can trade the VanEck Vectors Semiconductor ETF CFD. CFDs, or contracts for difference, are derivative contracts that track the underlying price of an asset. This enables investors to trade long and short using leverage. Learn more in The CFD Trading Guide

iShares PHLX Semiconductor ETF

The iShares PHLX Semiconductor ETF invest in companies in the United States that design, distribute and manufacture semiconductors. The fund is issued by BlackRock, the largest asset manager in the world, with over $9 trillion in assets. As this fund only includes stocks from the United States, there are no equities from other relevant regions of the semiconductor industry, like Taiwan or the Netherlands.

Being focused only on the United States, the iShares PHLX Semiconductor ETF is an option for investors who believe the semiconductor industry in the United States can become dominant. Investors looking to invest in semiconductors would do well to perform their own research and decide which region or combination of regions they want to focus their portfolio on.

The top 10 holdings of the iShares PHLX Semiconductor ETF are in order: Advanced Micro Devices Inc (~9.5%), Broadcom Inc (~9.4%), Intel Corporation Corp (~7.4%), NVIDIA Corp (~7.1%), Texas Instruments Inc (~5.5%), Qualcomm Inc (~4.4%), KLA Corp (~4.2%), Micron Technology Inc (~4.2%), Microchip Technology Inc (~4.1%), NXP Semiconductors NV (~4%).

As the iShares PHLX Semiconductor ETF only includes US-based companies directly involved in designing, distributing or manufacturing semiconductors, over 99% of the fund’s capital is allocated to the information technology sector. Around 20% is invested into the subsector of semiconductor equipment, with the remaining 80% going to semiconductors in general.

With Admirals, you can trade the iShares PHLX Semiconductor ETF CFD

How to Invest in Semiconductor ETFs

With Admirals, you can invest in real stocks and ETFs, as well as trade CFDs on stocks and ETFs, with the following commissions:

  • UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
  • US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
  • France/Germany stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission.

You can learn more about trading and investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the MT5 web platform and invest in four steps:

  1. Open an account with Admirals.
  2. Click on Trade on one of your live or demo trading accounts to open the web platform.
  3. Search for your symbol at the top of the search window.
  4. Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Source: Example of a chart and trading ticket from the Trade.MT5 web trading platform. Illustrative purposes only. Date captured: 22 December 2023.

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Investing in Semiconductor ETFs: Pros & Cons

Many of the current technological developments, like the AI revolution, the Internet of Things, the metaverse, and autonomous vehicles are happening thanks to developments within the semiconductor industry. Semiconductors and integrated circuits are unmissable components of any electronic device that includes a computing chip, which these days means not just telephones and computers but also TVs, cameras, and even doorbells, to name a few things.

The semiconductor industry is, therefore, at the forefront of many innovations. As the world develops and further integrates from a technological standpoint, the reach of semiconductor-producing companies is truly global. This means that an economic crisis in the European or American markets might not hit semiconductor companies and semiconductor ETFs as hard, as they also serve the Asian, South American, and African markets.

There are also downsides to investing in the semiconductor industry. First, the semiconductor industry is cyclical. This means that demand for semiconductors rises and falls in tune with global economic cycles. Periods of high demand often follow a decrease in sales. Semiconductor equities tend to fall in price when the demand for computing chips decreases naturally. This cyclical nature is something investors should remain aware of.

Secondly, the semiconductor industry has proven to be relatively fragile, as any shortage within the supply chain has historically been difficult to deal with. Many precious metals need to be mined to manufacture integrated circuits and the actual semiconducting materials like silicon. Whenever these resources are in short supply, they prove nigh impossible to replace, leading to situations like the global chip shortage the world has been experiencing for the past couple of years.

Continue Reading:

FAQs on Best Semiconductor ETFs

 

Does Vanguard have a semiconductor ETF?

Vanguard does not offer a semiconductor ETF specifically tailored to the semiconductor industry. Vanguard does have VGT, the Vanguard Information Technology ETF, in which approximately 25% of VGT’s capital is invested in the semiconductor and semiconductor equipment sectors.

 

What is the best semiconductor ETF?

There is no single answer to what constitutes the best semiconductor ETF, and the choice of the best semiconductor ETF depends on investors' individual financial goals, abilities, and the investment horizon they have in mind for withdrawing funds. Investors interested in semiconductor technology would do well to perform their own research on ETFs and companies in this sector.

 

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4. The Analysis is prepared by an independent analyst (Jitanchandra Solanki, hereinafter “Author”) based on personal estimations.

5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.

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