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The Zacks Analyst Blog features iShares Semiconductor ETF, VanEck Vectors Semiconductor ETF, Invesco PHLX Semiconductor ETF, SPDR S&P Semiconductor ETF and Invesco Dynamic Semiconductors ETF
For Immediate Release
Chicago, IL – March 10, 2023 – Zacks.com announces the list of stocks and ETFs featured on the Analyst Blog. Every day, Zacks Equity Research analysts discuss the latest news and events affecting stocks and the financial markets. ETFs recently featured on the blog include: iShares Semiconductor ETF SOXX, VanEck Vectors Semiconductor ETF SMH, Invesco PHLX Semiconductor ETF SOXQ, SPDR S&P Semiconductor ETF XSD, and Invesco Dynamic Semiconductors ETF PSI.
Here are the highlights from Thursday’s analyst blog:
A guide to investing in semiconductor ETFs
Given the use of chips in everyday life, from cars to electronic devices to airplanes and weapons, semiconductors have been the key drivers of all technology growth. Demand will continue to grow as digitization increases in diverse sectors including healthcare, transportation, financial systems, defence, agriculture and retail.
The rapid adoption of cutting-edge technologies such as cloud, Internet of Things, games, wearables, VR headsets, drones, virtual reality devices, artificial intelligence, cryptocurrencies, 5G and other advanced information technologies, and the solar energy industry should continue to fuel growth. The recent uptake in the use of artificial intelligence should also contribute to the semiconductor space.
The CHIPS-Plus law, known as the Chips and Science Act in the United States, is another plus. The law provides $54 billion in grants for semiconductor manufacturing and research, tens of billions to support regional technology hubs, and a tax credit covering 25% of semiconductor manufacturing investments through 2026. As such, it will encourage investment in chip manufacturing and the innovation and development of other US technologies.
Chip sales from 2022
The introduction of expensive new generation chips has led to an improvement in the product mix for semiconductors. According to Gartner, global semiconductor revenues grew 1.1% in 2022 to total $601.7 billion, up from $595 billion in 2021. Combined revenues of the 25 largest semiconductor vendors grew 2.8% in 2022 and accounted for 77.5% of the market.
“However, in the second half of 2022, the global economy began to slow under the strain of high inflation, rising interest rates, higher energy costs and ongoing COVID-19 lockdowns in China, impacting many global supply chains. Consumers also started cutting back on spending, with demand for PCs and smartphones suffering, and then companies started cutting back on spending in anticipation of a global recession, all of which impacted overall semiconductor growth,” Gartner said.
Any worry wall?
Tesla recently said it is using fewer silicon carbide wafers. Since silicon carbide is a great and expensive semiconductor, the recent announcement went against the semiconductor space. In fact, this could be a trend in the EV market in the coming days as many EV manufacturers could follow in Tesla’s footsteps. However, this is only the beginning. It will be a long time before silicon carbide is no longer used.
ETFs in focus
iShares Semiconductor ETF
The iShares Semiconductor ETF follows the ICE Semiconductor Index and provides exposure to US companies that design, manufacture and distribute semiconductors. It holds 30 securities in its basket and charges investors a fee of 35 basis points per year.
The iShares Semiconductor ETF has accumulated $6.95 billion in assets and trades volume at around 1 million shares per day. The product has a Zacks ETF Rank #3 (Hold) with a high risk outlook.
VanEck Vectors Semiconductor ETF
The VanEck Vectors Semiconductor ETF tracks 25 companies engaged in semiconductor manufacturing and equipment by tracking the MVIS US Listed Semiconductor 25 Index. It has $7.34 billion in assets under management and charges 35 basis points in annual fees and expenses.
The VanEck Vectors Semiconductor ETF is heavily traded with a daily volume of around 4.3 million shares. It has a Zacks ETF Rank #2 with a high risk outlook.
Invesco PHLX Semiconductor ETF
The Invesco PHLX Semiconductor ETF tracks the PHLX Semiconductor Sector Index and has 30 stocks in its basket. Invesco PHLX Semiconductor ETF has accumulated $98.9 million in assets. It charges 19 basis points in annual fees and trades an average daily volume of 42,000 shares.
SPDR S&P Semiconductor ETF
The SPDR S&P Semiconductor ETF provides exposure to the semiconductor segment of the broad technology sector and tracks the S&P Semiconductor Select Industry Index. She holds 40 stocks in her portfolio, each accounting for no more than 4%. The SPDR S&P Semiconductor ETF has $1.31 billion in assets under management and an average daily volume of about 74,000 shares. The ETF charges 35 basis points in fees per year and has a #3 Zacks ETF rank with a high risk outlook.
Invesco Dynamic Semiconductors ETF
The Invesco Dynamic Semiconductors ETF tracks the Dynamic Semiconductor Intellidex index and holds 32 securities in its basket, each accounting for less than 5.53%. The ETF has $552.9 million in assets under management and a modest average daily volume of 27,000 shares. The expense ratio is 0.56%. PSI has a Zacks ETF ranked #2 with a high risk outlook.
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Invesco Dynamic Semiconductors ETF (PSI) ETF Research Reports
VanEck Semiconductor ETF (SMH): ETF Research Reports
iShares Semiconductor ETF (SOXX) ETF Research Reports
SPDR S&P Semiconductor ETF (XSD) ETF Research Reports
Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports
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