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ETFs to Gain on Intel's Buyout of Tower Semiconductor
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The world’s largest chipmaker — Intel (INTC - Free Report) — has agreed to buy Israel-based chipmaker Tower Semiconductor for $5.4 billion to expand its manufacturing capacity and technology portfolio amid rising demand.
This put the spotlight on some ETFs, which could be the best way for investors to tap the opportunity arising from the proposed Intel-Tower deal. Investors should keep a close eye on the movement of these ETFs - First Trust Nasdaq Semiconductor ETF (FTXL - Free Report) , iShares Semiconductor ETF (SOXX - Free Report) , Invesco PHLX Semiconductor ETF (SOXQ - Free Report) , First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) and iShares Edge MSCI USA Value Factor ETF (VLUE - Free Report) - having the highest allocation to the world’s biggest semiconductor maker.
Deal in Focus
Per the terms of the deal, Intel will pay $53 in cash for each share of Tower, well above a closing price of $33.13 on Feb 14 (see: all the Technology ETFs here).
The transaction will provide access to more specialized production and make Intel better positioned to take advantage of the soaring demand for semiconductors. This is because Intel is currently grappling with a chip shortage and continues to face challenges linked to persistent global supply chain problems in the upcoming quarters.
The deal will accelerate Intel’s path to become a major provider of foundry services and capacity globally. Additionally, it will create a globally diverse end-to-end foundry to help meet growing semiconductor demand and bring more value to customers across the nearly $100 billion addressable foundry market.
The acquisition, expected to close in about 12 months, will be immediately accretive to non-GAAP earnings per share after the deal closes. The transaction has been approved by Intel’s and Tower’s boards of directors but is subject to Towers’ shareholders’ approval and regulatory approvals.
First Trust Nasdaq Semiconductor ETF offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. FTXL holds 30 stocks in its basket, with Intel taking the second spot at 8.7% share (read: Intel Q4 Earnings Put These ETFs in Focus).
First Trust Nasdaq Semiconductor ETF has accumulated $102.5 million in AUM. The average trading volume is light at around 20,000 shares, and the expense ratio is 0.60%. FTXL has a Zacks ETF Rank #2 (Buy).
iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket, with INTC taking the fifth spot, holding a 6.3% allocation.
iShares Semiconductor ETF has amassed $8.5 billion in its asset base and trades in volume of about 1.4 million shares a day. The product charges a fee of 43 basis points (bps) a year from investors and has a Zacks ETF Rank #1 (Strong Buy).
Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. Intel occupies the second position with an 8.8% share in the basket.
Invesco PHLX Semiconductor ETF debuted in the space last year in June and has accumulated $53.5 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 47,000 shares.
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. It holds about 92 securities in its basket. Of these firms, Intel takes the top spot, making up for 9% of the assets. From a sector look, about one-third of the portfolio is dominated by semiconductors & semiconductor equipment, followed by technology hardware storage & peripherals, software, and IT services.
First Trust NASDAQ Technology Dividend Index Fund has amassed $1.8 billion in its asset base while trading in a volume of around 129,000 shares per day. It charges 50 bps in annual fees.
iShares Edge MSCI USA Value Factor ETF offers exposure to large- and mid-cap U.S. stocks with lower valuations based on fundamentals and tracks the MSCI USA Enhanced Value Index. It holds 150 stocks in its basket, with Intel occupying the second position at 5.9% of assets. Information technology takes the largest share at 29.9%, while healthcare, consumer discretionary, financials and communication round off the next four (read: Top-Ranked Value ETFs to Gift This Valentine's).
iShares Edge MSCI USA Value Factor ETF has amassed $13.2 billion in its asset base and charges 15 bps in annual fees. It trades in an average daily volume of 2.3 million shares and has a Zacks Rank #2.
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ETFs to Gain on Intel's Buyout of Tower Semiconductor
The world’s largest chipmaker — Intel (INTC - Free Report) — has agreed to buy Israel-based chipmaker Tower Semiconductor for $5.4 billion to expand its manufacturing capacity and technology portfolio amid rising demand.
This put the spotlight on some ETFs, which could be the best way for investors to tap the opportunity arising from the proposed Intel-Tower deal. Investors should keep a close eye on the movement of these ETFs - First Trust Nasdaq Semiconductor ETF (FTXL - Free Report) , iShares Semiconductor ETF (SOXX - Free Report) , Invesco PHLX Semiconductor ETF (SOXQ - Free Report) , First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) and iShares Edge MSCI USA Value Factor ETF (VLUE - Free Report) - having the highest allocation to the world’s biggest semiconductor maker.
Deal in Focus
Per the terms of the deal, Intel will pay $53 in cash for each share of Tower, well above a closing price of $33.13 on Feb 14 (see: all the Technology ETFs here).
The transaction will provide access to more specialized production and make Intel better positioned to take advantage of the soaring demand for semiconductors. This is because Intel is currently grappling with a chip shortage and continues to face challenges linked to persistent global supply chain problems in the upcoming quarters.
The deal will accelerate Intel’s path to become a major provider of foundry services and capacity globally. Additionally, it will create a globally diverse end-to-end foundry to help meet growing semiconductor demand and bring more value to customers across the nearly $100 billion addressable foundry market.
The acquisition, expected to close in about 12 months, will be immediately accretive to non-GAAP earnings per share after the deal closes. The transaction has been approved by Intel’s and Tower’s boards of directors but is subject to Towers’ shareholders’ approval and regulatory approvals.
ETFs to Tap
First Trust Nasdaq Semiconductor ETF (FTXL - Free Report)
First Trust Nasdaq Semiconductor ETF offers exposure to the most-liquid U.S. semiconductor securities based on volatility, value and growth by tracking the Nasdaq US Smart Semiconductor Index. FTXL holds 30 stocks in its basket, with Intel taking the second spot at 8.7% share (read: Intel Q4 Earnings Put These ETFs in Focus).
First Trust Nasdaq Semiconductor ETF has accumulated $102.5 million in AUM. The average trading volume is light at around 20,000 shares, and the expense ratio is 0.60%. FTXL has a Zacks ETF Rank #2 (Buy).
iShares Semiconductor ETF (SOXX - Free Report)
iShares Semiconductor ETF follows the ICE Semiconductor Index and offers exposure to U.S. companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket, with INTC taking the fifth spot, holding a 6.3% allocation.
iShares Semiconductor ETF has amassed $8.5 billion in its asset base and trades in volume of about 1.4 million shares a day. The product charges a fee of 43 basis points (bps) a year from investors and has a Zacks ETF Rank #1 (Strong Buy).
Invesco PHLX Semiconductor ETF (SOXQ - Free Report)
Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index, holding 30 stocks in its basket. Intel occupies the second position with an 8.8% share in the basket.
Invesco PHLX Semiconductor ETF debuted in the space last year in June and has accumulated $53.5 million in its asset base. It charges 19 bps in annual fees and trades in an average daily volume of 47,000 shares.
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. It holds about 92 securities in its basket. Of these firms, Intel takes the top spot, making up for 9% of the assets. From a sector look, about one-third of the portfolio is dominated by semiconductors & semiconductor equipment, followed by technology hardware storage & peripherals, software, and IT services.
First Trust NASDAQ Technology Dividend Index Fund has amassed $1.8 billion in its asset base while trading in a volume of around 129,000 shares per day. It charges 50 bps in annual fees.
iShares Edge MSCI USA Value Factor ETF (VLUE - Free Report)
iShares Edge MSCI USA Value Factor ETF offers exposure to large- and mid-cap U.S. stocks with lower valuations based on fundamentals and tracks the MSCI USA Enhanced Value Index. It holds 150 stocks in its basket, with Intel occupying the second position at 5.9% of assets. Information technology takes the largest share at 29.9%, while healthcare, consumer discretionary, financials and communication round off the next four (read: Top-Ranked Value ETFs to Gift This Valentine's).
iShares Edge MSCI USA Value Factor ETF has amassed $13.2 billion in its asset base and charges 15 bps in annual fees. It trades in an average daily volume of 2.3 million shares and has a Zacks Rank #2.