ETF Spotlight: iShares Semiconductor ETF - The Average Joe


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    ETF Spotlight: iShares Semiconductor ETF

    Mike Hyer

    August 4, 2021

    What do Apple, Microsoft and Tesla all have in common? Semiconductor chips are a key component in their products, and they’re all worried they won’t have enough.

    What’s the big deal? Companies supplying the world’s computer chips are wrestling two big trends:

    • Skyrocketing demand for chips caused by a surge in digital consumption during COVID (i.e. computers, video games etc.) and growing demand for electric vehicles.
    • Pandemic-related supply chain troubles created long wait times for various industries — which is expected to drag on until 2022.

    For the rest of 2021, analysts are forecasting strong sales growth among semiconductor companies — with growth falling slightly in 2022 as the supply shortage eases.

    High pressure, higher performance: The increased focus on semiconductor manufacturers translated into impressive earnings:

    • AMD (NASDAQ:AMD) is up 21% since reporting big earnings last week.
    • Nvidia’s (NASDAQ:NVDA) stock is up 51% in 2021 and is expected to report earnings on Aug 18.
    • ON Semiconductor (NASDAQ:ON) jumped 11% after reporting earnings this week.

    The ETF Way: The iShares Semiconductor ETF (NASDAQ:SOXX) invests in some of the largest US-listed semiconductor companies:

    • 5-year return: 341.7% (YTD Return: 22.7%).
    • Top 3 holdings: Nvidia (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), Intel (NASDAQ:INTC).
    • Other facts: Focus on US-listed companies, ETF holds 30 companies.

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