The current trade war between the Trump administration and China has taken a quieter turn in recent weeks, as both sides look to save face while keeping critical supply chains intact.
One of the more notable developments came when China walked back its retaliatory 125% tariffs on U.S.-manufactured semiconductors. Initially imposed as a tit-for-tat response to Trump’s broad tariffs on Chinese imports, the rollback suggests cooler heads have prevailed — at least for now.
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These microchips are the backbone of just about every modern electronic device, vehicle and appliance. Like oil or aluminum in previous decades, access to semiconductors is now a strategic necessity. But unlike those two resources, global access is far from evenly distributed.
The U.S. controls a significant portion of the semiconductor design and manufacturing stack, with companies like Texas Instruments Inc. (ticker: TXN), Qualcomm Inc. (QCOM), Nvidia Corp. (NVDA), Advanced Micro Devices Inc. (AMD), Broadcom Inc. (AVGO) and Intel Corp. (INTC) all playing key roles.
Beyond American borders, two players hold the keys to critical parts of the supply chain. Dutch firm ASML Holdings NV (ASML) is the sole maker of extreme ultraviolet lithography machines, without which the most advanced chips can’t be made. Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), meanwhile, is the world’s dominant foundry and the go-to for outsourcing chip production at scale.
So, until China can achieve self-sufficiency in semiconductors, it will have to play ball with the U.S. and other key trade partners. And in the context of this current trade war, that means making some concessions on tariffs to keep the supply of chips flowing.
“Geopolitical tensions and tariffs have made semiconductor supply chains more complicated, driving companies toward diversifying and localizing manufacturing,” says Nick Frasse, product manager at asset manager VanEck.
If you’re investing in this space but only own one or two names tied to a specific geography or step in the semiconductor supply chain, you’re leaving yourself exposed. While this recent news from China is positive, it just as easily could have gone the other way.
That’s why some investors choose to diversify across the entire semiconductor value chain and across regions by using a sector-specific exchange-traded fund (ETF).
“The potential benefits of investing in semiconductor ETFs include exposure to a high-growth sector with strong fundamentals, diversification across multiple companies in the industry and the potential for long-term capital appreciation,” says Sean August, CEO of August Wealth Management Group.
Here are seven of the best semiconductor ETFs to buy today:
| ETF | Expense ratio |
| VanEck Semiconductor ETF (SMH) | 0.35% |
| VanEck Fabless Semiconductor ETF (SMHX) | 0.35% |
| iShares Semiconductor ETF (SOXX) | 0.35% |
| Invesco PHLX Semiconductor ETF (SOXQ) | 0.19% |
| Strive U.S. Semiconductor ETF (SHOC) | 0.40% |
| First Trust Nasdaq Semiconductor ETF (FTXL) | 0.60% |
| SPDR S&P Semiconductor ETF (XSD) | 0.35% |
VanEck Semiconductor ETF (SMH)
“Semiconductors continue to be a cornerstone for innovation, especially as AI models grow more powerful,” Frasse explains. “We’re closely watching compute and scaling laws — the trend of continuously increasing processing power — which strongly supports sustained semiconductor demand.” For exposure to semiconductors, VanEck offers SMH at a 0.35% expense ratio.
With $19.3 billion in assets under management (AUM), SMH is currently the largest U.S.-listed semiconductor ETF. It tracks the MVIS US Listed Semiconductor 25 Index, which places an emphasis on the largest and most liquid companies in this sector. Over the trailing five-year period, SMH has beaten the majority of funds in the Morningstar technology peer category on a risk-adjusted basis.
VanEck Fabless Semiconductor ETF (SMHX)
“The semiconductor industry continues to evolve rapidly, driven by fabless companies that prioritize chip design and innovation while outsourcing production,” Frasse explains. “This model allows firms like Nvidia to invest heavily in research and development, keeping capital expenditures low and maintaining agility in responding to market shifts.” These companies design chips instead of manufacturing them.
Semiconductor investors interested in a “capital light” approach to this sector can buy SMHX instead of SMH. This ETF tracks the MarketVector US Listed Fabless Semiconductor Index. Instead of owning vertically integrated chipmakers or those operating foundries, SMHX places a higher emphasis on intangibles like intellectual property and research. The ETF charges a 0.35% expense ratio.
iShares Semiconductor ETF (SOXX)
“When looking for semiconductor ETFs, investors should consider factors such as the expense ratio, the underlying index or benchmark, the fund’s holdings and diversification strategy, and the ETF’s historical performance,” August says. “It is also important to assess the fund’s liquidity and trading volume to ensure that it is easy to buy and sell.” A beginner-friendly ETF to learn these mechanics with is SOXX.
This semiconductor ETF tracks the NYSE Semiconductor Index, which holds a portfolio of the 30 largest U.S.-listed semiconductor companies. It is well capitalized with more than $10 billion in AUM and has a long track record dating back to 2001. Investors can trade SOXX with minimal costs thanks to a low 0.04% 30-day median bid-ask spread. Long-term ownership is affordable too, thanks to a 0.35% expense ratio.
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Invesco PHLX Semiconductor ETF (SOXQ)
“While certain segments of the semiconductor market, like memory, may be facing pressure due to oversupply concerns, the longer-term growth potential driven by advancements in AI, autonomous driving and high-performance computing remains strong,” says Rene Reyna, head of thematic and specialty product ETF strategy at Invesco. SOXQ offers an inexpensive way to bet on these tailwinds.
This ETF tracks 30 companies represented by the PHLX Semiconductor Sector Index, and undercuts both SMH and SOXX with a much lower 0.19% expense ratio. For a $10,000 investment, SMH and SOXX will cost investors $35 per year in fees. SOXQ, on the other hand, will only cost $19. Over time, this difference can compound significantly and result in meaningful drags on performance.
Strive U.S. Semiconductor ETF (SHOC)
On the face of it, SHOC is a pretty vanilla semiconductor ETF. It tracks the Bloomberg U.S. Listed Semiconductors Select Total Return Index, which has a portfolio of holdings very similar to that of SMH and SOXX. At a 0.4% expense ratio, it is pricier than SMH and SOXX, although not excessively so. The differentiating factor for SHOC is Strive Asset Management’s focus on “shareholder primacy.”
Strive Asset Management is unabashedly pro-capitalist and uses the capital in its ETFs to engage with company boards as activist investors, aiming to push back against what it views as “non-pecuniary” decisions. That is, any actions influenced by environmental, social and governance (ESG) considerations rather than pure financial performance. Investors who subscribe to this view may prefer ETFs like SHOC.
First Trust Nasdaq Semiconductor ETF (FTXL)
Some ETFs follow what’s known as a smart beta strategy, which means instead of simply buying the largest stocks and weighting them by market cap, they use alternative factors tied to fundamentals to select and weight holdings. FTXL is an example of this approach, tracking 30 holdings represented by the Nasdaq US Smart Semiconductor Index. The ETF charges a 0.6% expense ratio.
FTXL uses a three-factor screen based on trailing-12-month return on assets, gross income and momentum measured across three-, six-, nine- and 12-month price appreciation. The bottom quartile of stocks is eliminated, and the remaining 30 to 50 semiconductor companies are weighted based on trailing-12-month cash flow. Individual stock positions are capped at 8% and floored at 0.5%.
SPDR S&P Semiconductor ETF (XSD)
There’s more than one way to structure a semiconductor ETF. SMH favors the largest and most liquid names, while FTXL uses a complex multifactor quantitative strategy. XSD, by contrast, takes a much simpler approach. It tracks the S&P Semiconductor Select Industry Index, which equally weights the semiconductor stocks selected from the broader S&P Total Market Index.
In practice, that means all 40 or so of XSD’s stocks, regardless of size, receive the same weighting each time the ETF rebalances. This results in greater exposure to small- and mid-cap semiconductor companies and creates a natural buy-low, sell-high effect as the fund periodically resets to equal weights. However, it can also come at the cost of underperformance if large caps pull ahead. XSD charges a 0.35% expense ratio.
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7 Best Semiconductor ETFs to Buy in 2025 originally appeared on usnews.com
Update 04/29/25: This story was previously published at an earlier date and has been updated with new information.
