In this article, we discuss 10 best semiconductor ETFs.

Ever since the world has moved towards digital transformation, the semiconductor market has created quite the buzz. Semiconductors are crucial components for technology, be it smartphones, computers, electric vehicles, or healthcare, the demand for semiconductors is immense. While the demand for semiconductors was always high, the pandemic induced a global shortage. According to S&P Global, the industry generally operated a just-in-time inventory system, which meant that raw materials were acquired as per sale orders. However, as the world was locked down during the pandemic, the industry experienced a major supply chain disruption. Not only was transportation halted, but as the world moved towards an online model, the demand for electronic devices soared. Consequently, this caused major delays in production for components used in electronics. While industries operated at roughly 80% of their utilization before the pandemic, companies still struggled to cope with the post-pandemic demand, despite operating at 95% capacity. 

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According to the The Semiconductor Industry Association, chip sales have decreased by roughly 22% in 2023, as compared to the previous year. As of April 2023, the global semiconductor market reported sales worth $40 billion, which increased merely 0.3% than that of March 2023. This figure was over $50.9 billion in April 2022. While monthly sales have increased in China and Japan – Europe, Asia, and America have all experienced declines. As per World Semiconductor Trade Statistics (WSTS), the industry is expected to bounce back in 2024. As of May 2023, WSTS expects the market to grow by nearly 12% in 2024. While semiconductor usage is expected to increase in all major categories, this increase will be driven by the Memory segment, which is expected to rise by 40% over the year. 

As reported by Fortune Business Insights, the semiconductor market size was estimated at almost $528 billion in 2021. This is expected to grow to nearly $1381 billion over the next 7 years. This can be generally attributed to the increased dependence on the internet-of-things. While the automotive industry continues to grow, innovation in artificial intelligence, machine learning, and cloud computing is only going to boost the demand for integrated chips. 

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Recently, KPMG interviewed over 150 executives in the semiconductor space. According to their reports, 81% of the executives expect revenues to increase, as supply chain issues start to ease up in 2023. As per Mark Gibson, the Global Sector Head of Technology, Media & Telecommunications at KPMG International, the industry’s expectations of an increase in revenue hint that companies are “almost at the point of having excess inventory”. Mr. Gibson considers this a step in the right direction, as supply chain constraints alleviate over the next few months. In line with this, Gartner reported that while the demand for computers and smartphones stabilize, the industrial, automotive, and military sectors are set to dominate the demand. This means that the semiconductor industry is expected to experience more business spending than consumer spending. 

This article discusses some of the best semiconductor ETFs that provide investors with access to market leaders like NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD).

Our Methodology 

We used an ETF screener and filtered out the best performing semiconductor ETFs based on 5-year share price performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors. These ETFs have amassed significant gains over the past 5 years. The list is ranked in ascending order of the 5-year share price performance as of August 31, 2023.

Best Semiconductor ETFs

10. Columbia Seligman Semiconductor & Technology ETF (NYSE:SEMI)

5-Year Performance as of August 31: 5.42%

Columbia Seligman Semiconductor & Technology ETF (NYSE:SEMI)’s key focus is to capitalize on the growth potential of the technology industry, by investing in companies engaged in the semiconductor market. As of August 1, the fund reflects on the performance of 37 such companies, with a net expense ratio of 0.75%. Columbia Seligman Semiconductor & Technology ETF (NYSE:SEMI) was established on March 29, 2022. 

Lam Research Corporation (NASDAQ:LRCX) is the largest holding of Columbia Seligman Semiconductor & Technology ETF (NYSE:SEMI). The company is involved in the research, manufacture, and commercialization of semiconductor devices and integrated circuits. According to Insider Monkey’s second quarter database, 69 hedge funds were bullish on Lam Research Corporation (NASDAQ:LRCX), as opposed to 64 hedge funds from the past quarter.

Saltlight Capital said this about Lam Research Corporation (NASDAQ:LRCX) in its second quarter 2023 investor letter:

“Lam Research Corporation (NASDAQ:LRCX), a leading toolmaker for memory and logic semiconductor fabs, has demonstrated its resilience and competitive positioning in the semiconductor ecosystem. Chip densities are now approaching the limits of physics and Moore’s law is stretched to its atomic limitations. Future innovation is around 3D stacks of chips and advanced packaging. LAM has heavily invested in tools that push innovation at the atomic level. Despite this investment, it requires little shareholder capital to grow and therefore it returns capital through healthy dividends and share repurchases. LAM has been a wonderful performer for us over the last two years.”

9. Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ)

5-Year Performance as of August 31: 14.76%

Since its inception in June 2021, Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) tracks price and yield performance of the PHLX Semiconductor Sector Index. The index gauges the performance for 30 of the largest companies involved in the semiconductor industry. This includes a wide set of applications, such as microprocessors and integrated circuits. As of August 25, the ETF maintains a total expense ratio of 0.19%. The fund was launched on June 11, 2021. It is one of the best semiconductor ETFs to watch. 

Texas Instruments Incorporated (NASDAQ:TXN) is one of the largest holdings of Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ). It specializes in the manufacturing and distribution of semiconductors to manufacturers all around the world, operating within two segments – Analog and Embedded Processing. According to Insider Monkey’s second quarter database, 56 hedge funds were bullish on Texas Instruments Incorporated (NASDAQ:TXN), while 52 hedge funds had invested in the company during the previous quarter. 

Similar to NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Texas Instruments Incorporated (NASDAQ:TXN) is one of the best semiconductor stocks to watch. 

The London Company Large Cap Strategy said this about Texas Instruments Incorporated (NASDAQ:TXN) in its second quarter 2023 investor letter:

“Texas Instruments Incorporated (NASDAQ:TXN) – TXN shares declined 2% during the quarter. Demand was weaker in all markets except auto. While revenue was down 11% due to the slowing economy, we believe the outlook is positive. The company continues to invest in manufacturing facilities and should benefit from increased spending related to the CHIPS act. TXN is exposed to various end markets across the economy (e.g. automotive industrials). We believe growth in analog semiconductor content demand, in most markets, will drive TXN.”

8. Strive U.S. Semiconductor ETF (NYSE:SHOC)

5 Year Performance as of August 31: 47.95%

Strive U.S. Semiconductor ETF (NYSE:SHOC) takes a passive approach in its aim to provide exposure to the American semiconductor industry using a cost-effective index product. Introduced on October 6, 2022, the fund intends to enhance the value of companies by engaging in corporate governance strategies, such as voting on proxy shares and actively collaborating with management teams and boards to encourage a commitment to excellence. As of August 28, it holds a portfolio of 31 stocks, with net assets worth $36.66 million and an expense ratio of 0.40%. Strive U.S. Semiconductor ETF (NYSE:SHOC) is one of the best semiconductor ETFs to buy. 

Intel Corporation (NASDAQ:INTC) is a significant holding of Strive U.S. Semiconductor ETF (NYSE:SHOC). On July 27, Intel Corporation (NASDAQ:INTC) announced a Q2 revenue of $12.9 billion, along with a non-GAAP EPS of $0.13, exceeding the market consensus by $760 million and $0.16, respectively.

According to Insider Monkey’s second quarter database, 71 hedge funds were bullish on Intel Corporation (NASDAQ:INTC). In contrast, 68 hedge funds had invested in the company during the last quarter.

ClearBridge Large Cap Growth Strategy said this about Intel Corporation (NASDAQ:INTC) in its Q4 2022 investor letter:

“A third approach to return generation is purchasing idiosyncratic businesses that largely control their own destiny. Intel Corporation (NASDAQ:INTC), which we purchased in the first quarter on the premise that it would develop a leading domestic foundry business, has struggled with execution missteps and product delays. We are maintaining the position to provide ongoing exposure to semiconductors.”

7. Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL)

5 Year Performance as of August 31: 112.86%

Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL) is a heavily leveraged ETF that is focused on achieving daily returns that are 300% of the targeted benchmark, which is ICE Semiconductor Index (ICESEMIT). Despite the 3 times leverage, the fund explicitly tracks daily returns for 30 of the largest semiconductor companies. Introduced in March 2010, the fund maintains an expense ratio of 0.94%. Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL) is one of the top semiconductor ETFs. 

Broadcom Inc. (NASDAQ:AVGO) is the largest holding for Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL)’s underlying index. Broadcom Inc. (NASDAQ:AVGO) specializes in the production of semiconductors devices and services, operating under two major segments – Semiconductor Solutions and Infrastructure Software. According to Insider Monkey’s second quarter database, a total of 72 hedge funds were bullish on Broadcom Inc. (NASDAQ:AVGO). This number remained unchanged from the last quarter. 

Here is what Aristotle Atlantic Partners has to say about Broadcom Inc. (NASDAQ:AVGO) in its Q2 2023 investor letter:

“Broadcom contributed to outperformance, as the company is seen as a key beneficiary of the investment in generative Artificial Intelligence (AI) and Large Language Models (LLM). The company’s Application-Specific Integrated Circuit (ASIC) chips are being custom-built for customers to use in their data centers for accelerated computing. Broadcom’s networking chipsets are also expected to see increased levels of demand, as customers increase investments to enable the high-speed data transfer required by advanced AI training and inference. The company also announced a new multi-year supplier relationship with Apple, the company’s largest customer.”

6. First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL)

5 Year Performance as of August 31: 120.89%

The First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL) aims to achieve investment outcomes that mimic the price and yield of the Nasdaq US Smart Semiconductor™ Index, excluding the fees and expenses of the fund. Launched in September 2016, First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL)’s total net assets are valued at $1.24 billion as of August 30, while the expense ratio is 0.60%.

Micron Technology, Inc. (NASDAQ:MU) is a significant holding of First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL). The company develops semiconductor devices for storage solutions within four segments – Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit, and Storage Business Unit. According to Insider Monkey’s second quarter database, 86 hedge funds were bullish on Micron Technology, Inc. (NASDAQ:MU). This number increased from 73 hedge funds from the past quarter. 

Similar to NVIDIA Corporation (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Micron Technology, Inc. (NASDAQ:MU) is one of the best semiconductor stocks. 

Here is what Claret Asset Management has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2022 investor letter:

“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party’s over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”

5. Invesco Dynamic Semiconductors ETF (NYSE:PSI)

5 Year Performance as of August 31: 149.52%

Introduced in June 2005, Invesco Dynamic Semiconductors ETF (NYSE:PSI) tracks the Dynamic Semiconductor Intellide Index. Typically, the ETF allocates at least 90% of its total assets towards purchasing stocks that make up the index. Invesco Dynamic Semiconductors ETF (NYSE:PSI) aims to achieve a return on investment by thoroughly assessing firms using a range of criteria, such as price trends, earnings momentum, quality, management decisions, and intrinsic value. As of August 29, the ETF holds a portfolio of 32 stocks, while maintaining a total expense ratio of 0.55%. It is one of the best semiconductor ETFs to invest in. 

Analog Devices, Inc. (NASDAQ:ADI) is one of the major holdings of Invesco Dynamic Semiconductors ETF (NYSE:PSI). Analog Devices, Inc. (NASDAQ:ADI) specializes in the manufacture of integrated circuits, signal processing, and digital data solutions. According to Insider Monkey’s second quarter database, a total of 65 hedge funds were bullish on Analog Devices, Inc. (NASDAQ:ADI), as opposed to 73 hedge funds from the preceding quarter. 

Madison Investors Fund said this about Analog Devices, Inc. (NASDAQ:ADI) in its second quarter 2023 investor letter:

“The bottom five individual contributors for the quarter were U.S. Bancorp, Progressive, Analog Devices, Inc. (NASDAQ:ADI), Dollar Tree, and Danaher. Analog Devices and Danaher are both seeing end market demand moderate (in semiconductor and medical research, respectively) compared to the artificially high levels they experienced for two years due to the post-Covid chaos in supply chains. Despite these near-term dynamics, we think the longer-term outlooks remain excellent in both cases.”

4. iShares Semiconductor ETF (NASDAQ:SOXX)

5 Year Performance as of August 31: 168.43%

Next on our list of the best semiconductor ETFs is iShares Semiconductor ETF (NASDAQ:SOXX), which was introduced in July 2001. It aims to replicate the performance of the ICE Semiconductor Index, which consists of American semiconductor companies of different sizes. As of August 30, the ETF has invested in 33 companies, with net assets valued at $9.15 billion, while maintaining an expense ratio of 0.35%.

Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the significant holdings of the iShares Semiconductor ETF (NASDAQ:SOXX). Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the leading developers of processing units in the world. The company focuses on semiconductor operations. Advanced Micro Devices, Inc. (NASDAQ:AMD) has four main segments – Data Center, Client, Gaming, and Embedded. On August 1, the company announced a Q2 revenue of $5.36 billion and a non-GAAP EPS of $0.58, outperforming the market consensus by $40 million and $0.01, respectively.

According to Insider Monkey’s second quarter database, a total of 112 hedge funds were bullish on Advanced Micro Devices, Inc. (NASDAQ:AMD). In comparison, 91 hedge funds had held a similar position in the stock during the past quarter. 

L1 Capital International Fund had this to say about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its second quarter 2023 investor letter:

“During the June 2023 quarter the AI bubble continued to inflate. Advanced Micro Devices, Inc. (NASDAQ:AMD), as a key challenger to Nvidia, will benefit from increased demand for its next generation semiconductor chips. AMD’s share price is reflecting very bullish sentiment and the share price has run ahead of a reasonable base case valuation. Accordingly, we divested our entire position and moved AMD to our Bench.”

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

5 Year Performance as of August 31: 170.57%

SPDR S&P Semiconductor ETF (NYSE:XSD) was launched in January 2006, with the objective of achieving investment outcomes that generally match the overall performance of the S&P Semiconductor Select Industry Index. As of August 29, SPDR S&P Semiconductor ETF (NYSE:XSD) holds a portfolio of 38 stocks, with total assets under management of $1.54 billion. The fund features an expense ratio of 0.35%. SPDR S&P Semiconductor ETF (NYSE:XSD) is one of the best semiconductor ETFs to monitor. 

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is the largest holding of the SPDR S&P Semiconductor ETF (NYSE:XSD). MACOM Technology Solutions Holdings, Inc. (MTSI) is a global provider of analog semiconductor solutions, for wired and wireless applications. On August 3, the company announced its financial results for its fiscal third quarter ended June 30, 2023. The revenue came in at $148.5 million, along with a non-GAAP EPS of $0.54. While the revenue exceeded estimates by $1.14 million, the EPS was in line with the market consensus.

According to Insider Monkey’s second quarter database, 17 hedge funds were bullish on MACOM Technology Solutions Holdings, Inc. (MTSI). In comparison, 13 hedge funds had invested in the company during the past quarter. 

Artisan Partners said this about MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI)  in its Q3 2022 investor letter:

“MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) designs and manufactures high performance silicon and compound semiconductor analog/mixed signal chips used in the aerospace and defense, industrial, telecommunication and data center end markets. The company is led by a relatively new management team taking steps to accelerate topline growth and expand margins. The leadership team’s strategy is to addresses smaller, long-duration product cycle markets in which it can provide a differentiated offering, especially in compound semis such as GaAs, Al-GaAs, InP and GaN-on-SiC, using its design expertise and its US-trusted foundry / Department of Defense approved status. Rolling out several new, higher margin products and expanding into adjacent end markets such as auto and consumer should drive a compelling profit cycle in the periods ahead.”

2. VanEck Semiconductor ETF (NASDAQ:SMH)

5 Year Performance as of August 31: 186.98%

Launched in December 2011, VanEck Semiconductor ETF (NASDAQ:SMH) aims to track the performance of the MVIS US Listed Semiconductor 25 Index, which takes into consideration companies engaged in semiconductor production and applications. As of August 30, the ETF holds total net assets worth $10.07 billion, while featuring an expense ratio of 0.35%. VanEck Semiconductor ETF (NASDAQ:SMH) is one of the best semiconductor ETFs. 

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the largest holdings for VanEck Semiconductor ETF (NASDAQ:SMH). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a global manufacturer of integrated circuits and other semiconductor products. According to Insider Monkey’s second quarter database, 121 hedge funds were bullish on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), as opposed to 102 hedge funds from the last quarter.

Baron Emerging Markets Fund said this about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its first quarter 2023 investor letter:

“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed in the first quarter due to easing geopolitical concerns and expectations for end-demand recovery later in 2023. We retain conviction that Taiwan Semi’s technological leadership; pricing power; and exposure to secular growth markets, including high-performance computing, automotive, 5G, and IoT; will allow the company to sustain strong earnings growth over the next several years.”

1. GraniteShares 1.5x Long NVDA Daily ETF (NASDAQ:NVDL)

5 Year Performance as of August 31: 351.55%

Launched in December 2022, GraniteShares 1.5x Long NVDA Daily ETF (NASDAQ:NVDL) aims to achieve daily returns that are 1.5 times (150%) of the daily percentage fluctuations in the value of NVIDIA Corporation (NASDAQ:NVDA), net of fees and costs. As of August 31, the ETF operates with an expense ratio of 1.15%. GraniteShares 1.5x Long NVDA Daily ETF (NASDAQ:NVDL) is one of the best semiconductor ETFs to buy.  

Mairs & Power Growth Fund said this about NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2023 investor letter:

“Regarding stock selection in the first half, NVIDIA Corporation (NASDAQ:NVDA) was a massive outperformer, up 189.54%. Amazon and Microsoft were also positive contributors, up 55.19% and 42.66%, respectively. All three stocks benefited from a renewed interest in growth stocks by investors in the first half of the year. Nvidia is the leading provider of processors used for artificial intelligence (AI) computation for both learning and inferencing, and its stock rallied significantly on a massive earnings report in the first quarter as cloud data center companies invested heavily in AI.”

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Disclosure: None. 10 Best Semiconductor ETFs is originally published on Insider Monkey.