Back to top

Semiconductor ETFs in Focus as AMD Soars

Read MoreHide Full Article

Intel (INTC - Free Report) reported its second-quarter results recently and disclosed that it has fallen behind in developing the 7-nanometer manufacturing technology, meaning its next generation of chips will be shipped in late 2022 or even later.

Taiwanese chipmaker TSMC (TSM - Free Report) , the world’s largest contract chip manufacturer, has been shipping 7-nanometer chips for a year and is expected to start shipping 5-nanometer chips this fall, and 3-nanometer chips by fall of 2022. Apple (AAPL), Nvidia (NVDA - Free Report) , and Advanced Micro Devices (AMD - Free Report) are among its clients.

AMD, which has been taking market share from Intel, reported better-than-expected second-quarter results and raised its full-year guidance.  Its shares have soared while Intel’s shares have plunged in the past few days. (Please watch my colleague Kevin Cook’s video for more on AMD’s results: Release the Ryzen! AMD Roars in the Nanometer Wars)

With strong demand for chips in this work from home era, chip companies have held up well this year. Further, many newer growth areas have emerged for them, including autonomous cars, virtual reality, wearables and the Internet of Things (IoT).

Many advanced chips are designed in the US, but only around 12% are manufactured here, per FT. China is putting a lot of money in its chip industry and could become a serious competitor by the end of the decade. Rising trade tensions with China could mean more support for domestic chip production in the US.

The iShares PHLX Semiconductor ETF ((SOXX - Free Report) ) is a modified market cap weighted ETF. It has 30 holdings with a cap of 8% on individual securities. The VanEck Vectors Semiconductor ETF ((SMH - Free Report) ) also follows a market cap weighted index. However, it has a more concentrated portfolio compared with SOXX.

The SPDR S&P Semiconductor ETF (XSD - Free Report) is an equal weighted ETF.  The Invesco Dynamic Semiconductors Portfolio (PSI - Free Report) is a smart Beta ETF. It evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value.

Please watch the short video above to learn more about these ETFs.

(Disclosure:  Neena owns shares of SOXX in the ETF Investor Portfolio)

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Published in