Sector Analysis2025-09-27

Accelerating Sector Rotation in the AI Chip Industry: A Signal to Revise Semiconductor ETF Investment Strategy

Structural shifts in AI chip demand are accelerating sector rotation within the semiconductor industry. ETF strategy adjustments are needed to reflect the transition from memory to system semiconductors, and from GPUs to dedicated AI chips.

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As artificial intelligence technology advances at a rapid pace, sector rotation within the semiconductor industry is intensifying. The shift from GPU-centric designs to dedicated AI chips, and from general-purpose memory to high-bandwidth memory (HBM), is widening the performance gap among holdings within semiconductor ETFs. Now is a good time to use an asset allocation calculator to optimize sub-allocations within the semiconductor sector and to consider strategies that capture short-term momentum through leveraged products such as TQQQ.

The Rise of Dedicated AI Chip Designers

Beyond NVIDIA, established players like AMD and Intel, along with a new wave of AI chip startups, are intensifying competition. Within the SOXX ETF, the weighting of GPU designers continues to grow, driven by the expanding market for AI accelerators used in data centers. Cloud providers’ moves to develop proprietary chips are also accelerating structural change in the industry, leading to heightened price volatility among related stocks.

Reshaping the Memory Semiconductor Landscape

Surging demand for high-bandwidth memory (HBM) to handle AI workloads is reshaping the memory industry, which had previously centered on DRAM and NAND flash. Major memory manufacturers—Samsung Electronics, SK Hynix, and Micron—are ramping up HBM production capacity, translating into improved profitability for the memory sector. Investors may consider adjusting the memory-to-system-semiconductor allocation from 60:40 to 50:50 using a rebalancing calculator.

Semiconductor Equipment and Materials Companies Benefit

The accelerated adoption of advanced manufacturing processes for AI chip production is benefiting semiconductor equipment and materials companies. Increased investment in EUV lithography, high-purity chemicals, and advanced packaging technologies is improving the earnings outlook for companies such as ASML, Tokyo Electron, and Shin-Etsu Chemical. The SOXX ETF captures this broad value-chain growth, making it increasingly attractive for medium- to long-term investors.

Strategies for Using Leveraged ETFs

To capitalize on the high volatility of the semiconductor sector, investors may consider short-term use of leveraged ETFs such as TQQQ. However, it is important to note that TQQQ provides 3x leverage on the entire NASDAQ-100, in which semiconductors represent only about 20–25% of the index. For pure semiconductor exposure, SOXX ETF should serve as the core holding, and risk management should ensure that the overall portfolio’s semiconductor allocation does not exceed 15%.

Conclusion

The structural transformation of the semiconductor industry driven by AI innovation is creating new investment opportunities. Alongside broad sector exposure through the SOXX ETF, consider fine-tuning the sub-allocation between memory, system semiconductors, and equipment makers. Use a rebalancing calculator and an asset allocation calculator to determine the appropriate semiconductor sector weighting, and establish a risk management framework to prepare for elevated volatility.

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