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SectorUpdated 2026-02-20

Top 3 Semiconductor ETFs | SMH vs SOXX Comparison

The best semiconductor ETFs for the AI era. Compare SMH, SOXX, and other semiconductor sector ETFs — including their holdings, performance, and investment strategies.

Semiconductors are the backbone of the future: AI, cloud computing, autonomous vehicles, and virtually every next-generation technology depend on them. As companies like NVIDIA, TSMC, and ASML continue to grow, semiconductor ETFs have become one of the most-watched investment themes. This guide compares the leading semiconductor ETFs to help you choose the right one.

Top 3 Semiconductor ETFs Rankings

1
SMHVanEck Semiconductor ETFAI Chip Focus

Concentrates in 25 global semiconductor companies. Leading AI chip names — NVIDIA, TSMC, and ASML — are among its largest holdings.

Expense 0.35%Div 0.5%
2
SOXXiShares Semiconductor ETFU.S. Semiconductor Diversification

Invests in 30 primarily U.S.-listed semiconductor companies. Per-position caps keep the portfolio more diversified than SMH.

Expense 0.35%Div 0.7%
3
XLKTechnology Select Sector SPDR FundBroad Tech Sector

Not a pure semiconductor play, but covers the entire tech sector — balancing semiconductors with software. Its 0.09% expense ratio is among the lowest available.

Expense 0.09%Div 0.6%

Table of Contents

  1. 1. SMH vs SOXX: How They Compare
  2. 2. The AI Semiconductor Investment Outlook

1. SMH vs SOXX: How They Compare

SMH (VanEck) and SOXX (iShares) are both semiconductor sector ETFs, but they differ in meaningful ways. SMH holds 25 concentrated positions with a significant weight in Taiwan's TSMC, while SOXX holds 30 stocks with a larger tilt toward U.S.-based companies and per-position caps that improve diversification. Because of its higher concentration in top holdings, SMH tends to carry slightly more volatility than SOXX.

2. The AI Semiconductor Investment Outlook

Demand for GPUs and HBM memory used in AI training and inference is growing at an explosive pace. NVIDIA, AMD, and Broadcom — the companies at the heart of the AI chip buildout — sit at the top of both SMH and SOXX, giving investors indirect exposure to AI-driven growth through either ETF.

Key Investment Tips

  • 1.Semiconductor ETFs are high-volatility investments. Limiting them to 10–20% of your total portfolio helps manage risk.
  • 2.SMH carries meaningful geopolitical risk due to its large TSMC (Taiwan) weighting.
  • 3.Because semiconductors are cyclical, dollar-cost averaging (DCA) is generally more effective than lump-sum investing.
  • 4.Pairing QQQ with a semiconductor ETF lets you increase chip exposure within a broader tech allocation.

FAQ

Aren't semiconductor ETFs too expensive to buy?
Share prices may look high, but you can purchase as little as one share, and many brokers support fractional shares. What matters for investment decisions is valuation — metrics like the P/E ratio — not the absolute share price.
Is a semiconductor ETF the best way to invest in the AI theme?
Semiconductor ETFs focus on the hardware side of AI. To capture AI software and cloud exposure as well, consider pairing a semiconductor ETF with a broader tech fund like QQQ or VGT.
Which semiconductor ETF is better — SMH or SOXX?
Both are excellent semiconductor ETFs. SMH concentrates on 25 holdings, which tends to deliver higher returns in bull markets, while SOXX spreads across 30 names with position caps for better downside protection. Aggressive investors may prefer SMH; those seeking more stability may favor SOXX.

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