Global semiconductor industry revenue for 2021 reached $555.9 billion, the Semiconductor Industry Association (SIA) announced on Monday. This is a record annual total and a 26.2% increase from the 2020 total of $440.4 billion. The industry shipped a record 1.15 trillion units of semiconductors in 2021 as chipmakers boosted production to meet strong demand amid a global shortage.
The World Semiconductor Trade Statistics (WSTS) predicts that the global semiconductor market will grow by 8.8% in 2022. All product categories are expected to show improved growth rates. All regions are also expected to experience growth in 2022.
Last year, investors flocked to take advantage of the global semiconductor shortage, which saw the stock prices of major semiconductor makers soar. In the ETF space, more than $6.2 billion has been invested in semiconductor ETFs as investors seek to gain diversified exposure to semiconductor stocks across regions and expertise. The 5 largest ETFs (95% market share) generated returns of more than +40% on average. Semiconductor stocks fell in 2022 on reluctant signals from the Fed, but investors remain bullish – adding around $5 billion in semiconductor ETFs.
There are 9 non-leveraged US-domiciled semiconductor ETFs, VanEck Vectors Semiconductor ETF (SMH), iShares Semiconductor ETF (SOXX), SPRD S&P Semiconductor ETF (XSD), and Invesco Dynamic Semiconductors ETF (PSI). to only cite a few.
SOXX and SMH ETFs are vying for supremacy in terms of assets. As of February 16, 2022, SMH and SOXX each had assets of approximately $9.2 billion. SMH tracks the MVISUS Listed Semiconductor 25 Index (MVSMHTR) and provides exposure to 24 US-listed domestic and foreign companies involved in semiconductor manufacturing and equipment. The fund has a total expense ratio of 0.35% and trades primarily on NASDAQ. SOXX, on the other hand, tracks the total return of the ICE Semiconductor Index and provides exposure to 30 US companies that design, manufacture and distribute semiconductors. The fund has a total expense ratio of 0.43% and trades on the NASDAQ. Over the past year, SMH and SOXX have generated cumulative returns of +9% and +11% respectively.
Investors in Europe have 5 semiconductor ETFs to explore, the VanEck Vectors Semiconductor UCITS ETF (VVSM) being the largest ($922 million). The fund aims to track the MVIS US Listed Semiconductor 10% Capped Index and invests in foreign companies listed in the US and involved in the production and equipment of semiconductors. VVSM’s top positions include Taiwan Semiconductor Manufacturing (11.29%), ASML Holding NV (9.45%), Nvidia Corp. (8.63%), Intel Corp. (8.42%) and Qualcomm (8.34%). VVSM has a total expense ratio of 0.35% and trades on the London Stock Exchange (SMH, USD or SMGB, GBP), Deutsch Brese (VVSM, EUR), Six Swiss Exchange (SMHV, CHF) and Borsa Italiana (SMH, EUR).
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