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BofA Sees Global Chip Market Nearly Doubling: Semiconductor ETFs to Buy
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Key Takeaways
BofA sees the global semiconductor market nearly doubling to $3.2T by 2030.
Tight capacity, strong commitments, and memory and data-center demand support semiconductor growth.
Semiconductor ETFs offer diversified exposure to the chip industry.
With safety concerns and calls for a slowdown in AI development gaining momentum, questions surrounding the broader AI infrastructure trade have increased. Against this backdrop, Bank of America’s (BAC - Free Report) forecast that the global semiconductor market could nearly double by the end of this decade offers a positive outlook for the semiconductor industry.
As quoted on a Yahoo Finance article, BofA sees the global semiconductor market surging to $3.2 trillion by 2030 from $1.7 trillion in 2026, highlighting the continued strength of AI infrastructure, memory and data-center demand despite the recent concerns.
The Philadelphia Semiconductor Index (SOX), which has been trading in negative territory over the past five sessions and the past month, gained around 3.14% on Thursday. Despite recent market uncertainty and volatility, the index has delivered strong gains over the past year and year to date, rising about 91.19% and 59.14%, respectively.
A Closer Look at BofA’s Semiconductor Forecast
As quoted on the abovementioned Yahoo Finance article, analysts at BofA see continued strength across customer orders, long-term agreements, capacity commitments and semiconductor pricing, despite growing concerns over a potential slowdown in AI infrastructure investment.
According to BofA analysts, 2027 remains largely fully booked and contracted across compute, networking and memory vendors. They expect supply to remain tight in 2028 as well, driven by strong demand for CPUs, XPU attach and new optics-based scale-up solutions, along with growing AI accelerator demand across multiple ASIC and GPU vendors.
Memory is set to play a central role in the semiconductor growth story. BofA expects memory sales to climb from $937 billion in 2026 to $1.8 trillion by 2030. Over the same period, core semiconductor sales are projected to rise from $739 billion to $1.35 trillion, while server-related sales could increase from $359 billion to $848 billion.
The growth is not limited to chips. BofA also expects spending on wafer-fabrication equipment to more than double, reaching $359.8 billion by 2030 from $155.9 billion in 2026.
However, a potential slowdown in hyperscalers’ AI spending remains the biggest risk to the semiconductor outlook. That said, strong customer commitments, pricing and limited capacity through 2027 point to continued momentum in the semiconductor cycle.
The Debate Around Slowing AI Development
The major overhang over the semiconductor market and the broader AI trade is the recent calls by major tech leaders for a more measured pace of AI development. Rising concerns around AI safety have prompted several prominent tech leaders, including Dario Amodei, Sam Altman and Elon Musk, to call for a more measured approach to the development of advanced AI.
However, these calls for caution do not necessarily signal an end to AI development. As Amodei and Altman have emphasized, the objective is not to halt AI progress altogether but to pursue development at a more measured and responsible pace.
Even under a more measured approach, AI investment and development could remain substantial, particularly as companies continue to expand their computing infrastructure and pursue AI-related opportunities.
How Should Investors Play Semiconductors
The AI trade remains a volatile play in the current economic environment, particularly as concerns surrounding AI safety and its broader implications rise. However, with the outlook for the semiconductor industry remaining robust, maintaining a measured exposure to the sector could allow investors to participate in its growth potential.
Investors can use ETFs to gain diversified exposure to the semiconductor industry, which can help mitigate some of the risks associated with investing in the sector, while avoiding an excessive concentration in a volatile segment. While the outlook for the semiconductor industry remains strong, semiconductor ETFs are not low-risk investments and can be subject to volatility.
Investors should therefore maintain an allocation that aligns with their risk tolerance and avoid excessive exposure to the sector. They should also keep a close eye on developments surrounding the AI trade, given the evolving market perception of the theme, particularly those affecting the semiconductor industry.
Semiconductor ETFs to Consider
Below, we highlight a few semiconductor ETFs that investors may consider.
VanEck Semiconductor ETF seeks to track the performance of MVIS US Listed Semiconductor 25 Index with a basket of 26 securities. The fund charges an annual fee of 0.35% and has an exposure of 82.32% to the United States.
VanEck Semiconductor ETF has gathered an asset base of $66.43 billion and has a one-month average trading volume of about 6.82 million shares. SMH has Zacks ETF Rank #1 (Strong Buy).
iShares Semiconductor ETF seeks to track the performance of ICE Semiconductor Index with a basket of 30 securities. The fund charges an annual fee of 0.33%.
iShares Semiconductor ETF has gathered an asset base of $41.99 billion and has a one-month average trading volume of about 7.22 million shares. SOXX has Zacks ETF Rank #1.
Invesco PHLX Semiconductor ETF seeks to track the performance of PHLX Semiconductor Sector Index with a basket of 31 securities. The fund charges an annual fee of 0.19% and has an exposure of 87.91% to the United States.
Invesco PHLX Semiconductor ETF has gathered an asset base of $2.87 billion and has a one-month average trading volume of about 1.49 million shares. SOXQ has a Zacks ETF Rank #1.
State Street SPDR S&P Semiconductor ETF (XSD - Free Report)
State Street SPDR S&P Semiconductor ETF seeks to track the performance of S&P Semiconductor Select Industry Index with a basket of 48 securities. The fund charges an annual fee of 0.35%.
State Street SPDR S&P Semiconductor ETF has gathered an asset base of $2.56 billion and has a one-month average trading volume of about 105,000 shares. XSD has a Zacks ETF Rank #2 (Buy).
Invesco Semiconductors ETF seeks to track the performance of Dynamic Semiconductor Intellidex Index with a basket of 31 securities. The fund charges an annual fee of 0.56% and has an exposure of 95.14% to the United States.
Invesco Semiconductors ETF has gathered an asset base of $2.46 billion and has a one-month average trading volume of about 330,000 shares. PSI has a Zacks ETF Rank #2.
View the Zacks #1 Rank List
Image: Shutterstock
BofA Sees Global Chip Market Nearly Doubling: Semiconductor ETFs to Buy
Key Takeaways
With safety concerns and calls for a slowdown in AI development gaining momentum, questions surrounding the broader AI infrastructure trade have increased. Against this backdrop, Bank of America’s (BAC - Free Report) forecast that the global semiconductor market could nearly double by the end of this decade offers a positive outlook for the semiconductor industry.
As quoted on a Yahoo Finance article, BofA sees the global semiconductor market surging to $3.2 trillion by 2030 from $1.7 trillion in 2026, highlighting the continued strength of AI infrastructure, memory and data-center demand despite the recent concerns.
The Philadelphia Semiconductor Index (SOX), which has been trading in negative territory over the past five sessions and the past month, gained around 3.14% on Thursday. Despite recent market uncertainty and volatility, the index has delivered strong gains over the past year and year to date, rising about 91.19% and 59.14%, respectively.
A Closer Look at BofA’s Semiconductor Forecast
As quoted on the abovementioned Yahoo Finance article, analysts at BofA see continued strength across customer orders, long-term agreements, capacity commitments and semiconductor pricing, despite growing concerns over a potential slowdown in AI infrastructure investment.
According to BofA analysts, 2027 remains largely fully booked and contracted across compute, networking and memory vendors. They expect supply to remain tight in 2028 as well, driven by strong demand for CPUs, XPU attach and new optics-based scale-up solutions, along with growing AI accelerator demand across multiple ASIC and GPU vendors.
Memory is set to play a central role in the semiconductor growth story. BofA expects memory sales to climb from $937 billion in 2026 to $1.8 trillion by 2030. Over the same period, core semiconductor sales are projected to rise from $739 billion to $1.35 trillion, while server-related sales could increase from $359 billion to $848 billion.
The growth is not limited to chips. BofA also expects spending on wafer-fabrication equipment to more than double, reaching $359.8 billion by 2030 from $155.9 billion in 2026.
However, a potential slowdown in hyperscalers’ AI spending remains the biggest risk to the semiconductor outlook. That said, strong customer commitments, pricing and limited capacity through 2027 point to continued momentum in the semiconductor cycle.
The Debate Around Slowing AI Development
The major overhang over the semiconductor market and the broader AI trade is the recent calls by major tech leaders for a more measured pace of AI development. Rising concerns around AI safety have prompted several prominent tech leaders, including Dario Amodei, Sam Altman and Elon Musk, to call for a more measured approach to the development of advanced AI.
However, these calls for caution do not necessarily signal an end to AI development. As Amodei and Altman have emphasized, the objective is not to halt AI progress altogether but to pursue development at a more measured and responsible pace.
Even under a more measured approach, AI investment and development could remain substantial, particularly as companies continue to expand their computing infrastructure and pursue AI-related opportunities.
How Should Investors Play Semiconductors
The AI trade remains a volatile play in the current economic environment, particularly as concerns surrounding AI safety and its broader implications rise. However, with the outlook for the semiconductor industry remaining robust, maintaining a measured exposure to the sector could allow investors to participate in its growth potential.
Investors can use ETFs to gain diversified exposure to the semiconductor industry, which can help mitigate some of the risks associated with investing in the sector, while avoiding an excessive concentration in a volatile segment. While the outlook for the semiconductor industry remains strong, semiconductor ETFs are not low-risk investments and can be subject to volatility.
Investors should therefore maintain an allocation that aligns with their risk tolerance and avoid excessive exposure to the sector. They should also keep a close eye on developments surrounding the AI trade, given the evolving market perception of the theme, particularly those affecting the semiconductor industry.
Semiconductor ETFs to Consider
Below, we highlight a few semiconductor ETFs that investors may consider.
VanEck Semiconductor ETF (SMH - Free Report)
VanEck Semiconductor ETF seeks to track the performance of MVIS US Listed Semiconductor 25 Index with a basket of 26 securities. The fund charges an annual fee of 0.35% and has an exposure of 82.32% to the United States.
VanEck Semiconductor ETF has gathered an asset base of $66.43 billion and has a one-month average trading volume of about 6.82 million shares. SMH has Zacks ETF Rank #1 (Strong Buy).
iShares Semiconductor ETF (SOXX - Free Report)
iShares Semiconductor ETF seeks to track the performance of ICE Semiconductor Index with a basket of 30 securities. The fund charges an annual fee of 0.33%.
iShares Semiconductor ETF has gathered an asset base of $41.99 billion and has a one-month average trading volume of about 7.22 million shares. SOXX has Zacks ETF Rank #1.
Invesco PHLX Semiconductor ETF (SOXQ - Free Report)
Invesco PHLX Semiconductor ETF seeks to track the performance of PHLX Semiconductor Sector Index with a basket of 31 securities. The fund charges an annual fee of 0.19% and has an exposure of 87.91% to the United States.
Invesco PHLX Semiconductor ETF has gathered an asset base of $2.87 billion and has a one-month average trading volume of about 1.49 million shares. SOXQ has a Zacks ETF Rank #1.
State Street SPDR S&P Semiconductor ETF (XSD - Free Report)
State Street SPDR S&P Semiconductor ETF seeks to track the performance of S&P Semiconductor Select Industry Index with a basket of 48 securities. The fund charges an annual fee of 0.35%.
State Street SPDR S&P Semiconductor ETF has gathered an asset base of $2.56 billion and has a one-month average trading volume of about 105,000 shares. XSD has a Zacks ETF Rank #2 (Buy).
Invesco Semiconductors ETF (PSI - Free Report)
Invesco Semiconductors ETF seeks to track the performance of Dynamic Semiconductor Intellidex Index with a basket of 31 securities. The fund charges an annual fee of 0.56% and has an exposure of 95.14% to the United States.
Invesco Semiconductors ETF has gathered an asset base of $2.46 billion and has a one-month average trading volume of about 330,000 shares. PSI has a Zacks ETF Rank #2.