The fortunes of the world’s largest semiconductor companies, such as Nvidia Corp. (ticker: NVDA), ASML Holding NV (ASML) and Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) don’t just depend on supply-demand dynamics or input costs like silicon and labor.
Increasingly, their stock prices move with the strategic interests of the world’s most powerful governments, for better or worse.
A recent example illustrates this well: Shares of several top chipmakers slid after a U.S. Commerce Department official reportedly told executives that export waivers allowing American-made chips to be used in Chinese factories would be revoked.
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This is just the latest flashpoint in the ongoing U.S.-China tech cold war, where semiconductors are in the crosshairs. Over the past decade, control over critical nodes in the chipmaking value chain has consolidated into the hands of U.S.-aligned nations.
For instance, Nvidia dominates chip design, Taiwan Semiconductor is the key player in advanced manufacturing and ASML holds a monopoly on the extreme ultraviolet lithography systems needed to produce cutting-edge chips.
As a result, Washington has wielded its position to limit China’s access to next-generation semiconductors, often through a combination of export controls and targeted sanctions.
“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.
Yet even as individual companies cycle in and out of favor, semiconductors as an industry are expected to benefit from powerful secular tailwinds. The rise of artificial intelligence (AI), autonomous vehicles and the proliferation of connected devices via the Internet of Things all require increasingly advanced chips.
That’s why some investors are opting to sidestep the risks of picking individual stocks and instead gain exposure through semiconductor exchange-traded funds (ETFs). These funds offer diversified access to the global chip industry without tying your fortunes to a single name that might be caught in the latest geopolitical crossfire.
“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 |
| iShares Semiconductor ETF (SOXX) | 0.35% |
| VanEck Semiconductor ETF (SMH) | 0.35% |
| VanEck Fabless Semiconductor ETF (SMHX) | 0.35% |
| Invesco PHLX Semiconductor ETF (SOXQ) | 0.19% |
| SPDR S&P Semiconductor ETF (XSD) | 0.35% |
| Direxion Daily Semiconductor Bull 3x Shares (SOXL) | 0.75% |
| Direxion Daily Semiconductor Bear 3x Shares (SOXS) | 0.97% |
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.” ETFs offered by large firms like BlackRock Inc. (BLK), manager of the iShares group of funds, tend to have these traits.
SOXX is a great beginner-friendly semiconductor ETF. It passively tracks the NYSE Semiconductor Index, which simply takes the 30 largest U.S.-listed semiconductor companies and weights them by market capitalization with some adjustments. SOXX is highly liquid, trading over 7.8 billion shares on average over a 30-day period with a correspondingly low 0.01% median bid-ask spread. It charges 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.” VanEck’s flagship semiconductor ETF is SMH, which charges the same 0.35% expense ratio as SOXX does.
SMH is currently the largest U.S. listed semiconductor ETF, with over $25 billion in assets under management. It tracks the MVIS US Listed Semiconductor 25 Index, which primarily emphasizes market capitalization and liquidity for inclusion. The ETF currently shares 23 overlapping holdings with SOXX, including names such as Nvidia, Broadcom Inc. (AVGO) and Advanced Micro Devices Inc. (AMD).
VanEck Fabless Semiconductor ETF (SMHX)
Some chipmakers own and operate manufacturing plants, which exposes them to high capital costs and operational risks. In contrast, fabless companies focus solely on chip design and outsource production to third-party foundries. This model lets them stay asset-light, with their main strengths being research, intellectual property and engineering talent. SMHX provides exposure to fabless semiconductor stocks.
“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.” SMHX costs the same 0.35% expense ratio as SMH does.
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. For affordable semiconductor exposure, Invesco offers SOXQ.
ETF issuers compete fiercely when it comes to costs, which explains why SMH and SOXX offer identical expense ratios. However, Invesco undercut both with SOXQ by charging a far lower 0.19%. This ETF tracks the PHLX Semiconductor Sector Index, a benchmark of the 30 largest U.S.-listed semiconductor firms. SOXQ’s portfolio currently shares a high overlap with both SOXX and SMH.
[Read: 7 Best Tech ETFs to Buy in 2025]
SPDR S&P Semiconductor ETF (XSD)
SMH, SOXX and SOXQ all utilize some variant of market capitalization weighting. Despite slight differences in methodologies, all three semiconductor ETFs emphasize the larger companies. This approach benefits from low turnover and momentum, but can result in concentration risk after prolonged periods of outperformance. For a more balanced approach, consider XSD.
As with most of the previous semiconductor ETFs, XSD charges the standard 0.35% expense ratio. However, its portfolio features more small- and mid-cap semiconductor representation. This is because the ETF’s benchmark, the S&P Semiconductor Select Industry Index, is equally weighted. This means a larger firm like Nvidia is given the same allocation as a smaller firm whenever the ETF rebalances.
Direxion Daily Semiconductor Bull 3x Shares (SOXL)
Semiconductors are already a volatile sector. For example, SOXX has a three-year beta of 1.6. That means it tends to move 60% more than the overall market, which has a beta of 1. For short-term traders, this elevated beta can be attractive since it offers greater potential for quick gains. But to amplify that volatility even more, you’d typically need to use options or trade on margin.
Both can be avoided if you opt for a leveraged ETF like SOXL. This fund uses derivatives called swaps to deliver three times the daily return of the NYSE Semiconductor Index. Keep in mind the leverage resets daily, so holding this long-term likely won’t produce exactly three times the benchmark’s return. It simply magnifies SOXX’s daily price swings by a factor of three. SOXL charges a 0.75% expense ratio.
Direxion Daily Semiconductor Bear 3X Shares (SOXS)
Shorting semiconductor stocks on a tactical basis is another viable strategy given the sector’s boom-and-bust cycles, supply chain disruptions and sensitivity to geopolitical headlines. For instance, threats of export controls, weak smartphone demand or a global slowdown in capital spending can all hammer chip stocks. You can profit from a decline by shorting SOXX directly or buying put options.
But for many traders, an easier option is trading a leveraged inverse ETF like SOXS. This fund seeks to deliver three times the inverse daily performance of the NYSE Semiconductor Index. It uses swaps and the same daily reset mechanics as SOXL, with all the same caveats and risks. Because the semiconductor sector trends upward long term, SOXS has historically posted poor long-term returns.
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7 Best Semiconductor ETFs to Buy in 2025 originally appeared on usnews.com
Update 06/26/25: This story was previously published at an earlier date and has been updated with new information.
