Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

2 Semiconductor ETFs Poised For Rebound This Earnings Season

By Tezcan Gecgil/Investing.com ETFsJul 11, 2022 11:43AM ET
www.investing.com/analysis/2-semiconductor-etfs-poised-for-rebound-this-earnings-season-200626916
2 Semiconductor ETFs Poised For Rebound This Earnings Season
By Tezcan Gecgil/Investing.com   |  Jul 11, 2022 11:43AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
INTC
+0.43%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
QCOM
-0.61%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NVDA
-2.81%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TXN
-1.32%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
FSLR
-0.28%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
WOLF
-5.62%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Recent declines in semiconductor stocks make industry ETFs attractive this earnings season
  • Last week Samsung Electronics issued robust Q2 pre-earnings guidance
  • Investors now wonder if other chip heavyweights may also release favorable metrics in the weeks ahead

Semiconductor stocks and exchange-traded funds (ETFs) that focus on chip shares continued to struggle in June. Now, as a new earnings season begins, investors are wondering if semis can break that trend and start a much-awaited bull run.

2022 has so far brought numerous headwinds to the chip industry. Data provider TrendForce recently highlighted:

“The overall consumer demand has weakened rapidly due to recent events such as the Russia-Ukraine military conflict and the COVID-19 lockdown in Shanghai.”

As a result, the widely followed Philadelphia Semiconductor Index lost about a third of its value year-to-date (YTD). Yet, last week Samsung Electronics (KS:005930) issued robust Q2 pre-earnings guidance. Wall Street was pleased with the numbers and noted strong sales in memory chips.

Samsung will announce full earnings on July 28 as investors now wonder if other chip heavyweights may also release favorable metrics in the weeks ahead to help end the downward trajectory in share prices.

Despite recent setbacks, the outlook for the industry remains strong. The US Semiconductor Industry Association (SIA) reminds us that semiconductors are used in virtually every modern technology. Readers may also be interested to know that China is the largest consumer of chips.

With that information, here are two semiconductor ETFs to buy in Q3:

1. VanEck Semiconductor ETF

  • Current Price: $208.64
  • 52-week range: $189.94 - $318.82
  • Dividend Yield: 0.75%
  • Expense ratio: 0.35% per year

Our first fund, the VanEck Semiconductor ETF (NASDAQ:SMH), currently invests in 25 leading chip companies. The ETF was first listed in December 2011 and has $6.2 billion in net assets. Recent metrics highlight that in 2022 global semiconductor revenues should exceed $660 billion, up 13.7% year-over-year (YoY).

Close to 60% of the portfolio is held in the top 10 stocks. Thus, SMH is a highly concentrated fund.

SMH Weekly Chart
SMH Weekly Chart

Among the leading holdings are Taiwan Semiconductor Manufacturing (NYSE:TSM), NVIDIA (NASDAQ:NVDA), Texas Instruments (NASDAQ:TXN), Qualcomm (NASDAQ:QCOM), Intel (NASDAQ:INTC), and ASML (NASDAQ:ASML).

With a market share of well over 50%, TSM is the largest chip manufacturer globally. Therefore, analysts pay close attention to its quarterly earnings, expected on July 14.

Meanwhile, the US recently passed the CHIPS for America Act to improve the competitiveness of US firms in the industry. Put another way, the share of US-based chip names will likely increase in the coming years.

SMH hit a record high in November 2021. Yet, the fund is down 32.4% YTD.

The semiconductor industry is highly cyclical, and potential downturns in the industry would be important to watch. However, following the recent decline, which brought valuations more in line with historical metrics, we are bullish on many robust chip shares and believe SMH deserves readers’ attention.

2. SPDR S&P Semiconductors

  • Current Price: $156.82
  • 52-week range: $141.26 - $250.82
  • Dividend yield: 0.30%
  • Expense ratio: 0.35% per year

Next up is the SPDR S&P Semiconductor ETF (NYSE:XSD), an equal-weighted fund that gives access to 40 chip names. The ETF was launched in January 2006.

XSD Weekly Chart
XSD Weekly Chart

XSD tracks the S&P Semiconductor Select Industry Index. The top 10 stocks comprise close to 29% of $951.7 million in net assets.

Among them are Impinj (NASDAQ:PI), First Solar (NASDAQ:FSLR), Qualcomm, Lattice Semiconductor (NASDAQ:LSCC), Qorvo (NASDAQ:QRVO), and Wolfspeed (NYSE:WOLF). We should note that all the names in XSD are US-based chip companies. Thus, industry heavyweights like TSM or ASML are not on the roster.

XSD saw an all-time high in early January. But since then, chip names in the fund have come under pressure, leading to a loss of over 35%.

Trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 14.79x and 3.14x. Readers who want to bet on the semiconductor industry through an equal-weighted fund this earnings season should research XSD further.

Disclosure: Tezcan Gecgil, Ph.D., does not have Hold positions in either SMH or XSD.

2 Semiconductor ETFs Poised For Rebound This Earnings Season
 

Related Articles

ETF Central
Growth Potential of China ETFs By ETF Central - Jan 31, 2023

China’s economy stalled last year amidst strict lockdowns related to Zero-Covid policies, in addition to an ailing property market. This weighed on Chinese stocks, with the...

2 Semiconductor ETFs Poised For Rebound This Earnings Season

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Charlie Wang
Charlie Wang Jul 11, 2022 12:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
right... follow free articles here to get rich guys. coz all them analysts are so good and filthy rich themselves.
Steve
Steve Jul 11, 2022 12:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I don't believe you
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email