VanEck is announcing the newest addition to its suite of thematic equity ETFs: the VanEck Fabless Semiconductor ETF (SMHX), targeting semiconductor companies that design and develop chips but outsource their manufacturing.
Unlike integrated chip manufacturers, fabless companies focus solely on chip design and development and outsource their production. This approach allows them to avoid the high costs of owning manufacturing facilities, allocating resources instead to invest heavily in research & development and respond more quickly to technological advances and changing market dynamics.
SMHX joins a VanEck thematic ETF lineup that already includes the VanEck Semiconductor ETF (SMH), a $23 billion fund that is designed to provide exposure to the performance of the largest and most liquid companies in the global semiconductor industry, regardless of whether they operate as fabless or integrated organizations.
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“The global semiconductor space has been going through a transformational period in recent years, as demand has spiked alongside advancements in generative AI and other fast-moving technologies. Despite recent volatility, there remain a number of tailwinds for the industry, including the CHIPS Act,” said Nicholas Frasse, Associate Product Manager with VanEck. “While the Act is primarily aimed at increasing manufacturing capacity in the U.S., it bolsters the ecosystem fabless companies rely on. With their leaner operations and focus on R&D, companies that take a fabless approach are well-positioned to benefit from the enhanced manufacturing incentives, driving further innovation and gaining deployment capabilities. That’s why we’re very pleased to be making SMHX available to investors alongside SMH and our other thematic offerings.”
SMHX seeks to track, before fees and expenses, the performance of the MarketVector™ US Listed Fabless Semiconductor Index (MVSMHX), which is designed to track the overall performance of fabless companies in the semiconductor industry. To be eligible for inclusion, companies must be pure play in nature, generating at least 50% of their revenues from fabless semiconductor business lines.
“For investors who are more focused on innovation than vertical integration and on R&D spending as opposed to manufacturing, SMHX could be an important part of a diversified equity portfolio. We look forward to further educating all types of investors about the role fabless chip designers are playing in the powerful technological changes of the past few years and the advancements still to come,” added Frasse.
SOURCE: Businesswire