SOXX vs SMH: Best Semiconductor ETF Compared

Last Updated: July 2025 | Reviewed quarterly. All holdings weights, AUM figures, and performance data are date-sensitive. Verify current figures at iShares.com, VanEck.com, and ETF.com before investing.

Key Takeaways

• SOXX caps any single holding at approximately 8% at each quarterly rebalance; SMH allows a single holding to reach approximately 20%
• NVIDIA represents approximately 20–25% of SMH versus approximately 8% of SOXX (as of mid-2025, Sources: VanEck.com, iShares.com)
• SMH holds 25 companies including TSMC (Taiwan) and ASML (Netherlands); SOXX holds approximately 30 US-based companies
• Both SOXX and SMH charge 0.35% annually; SOXQ tracks the same index as SOXX at 0.19%
• SMH holds approximately $22–26 billion in AUM versus SOXX at approximately $12–14 billion
• A 30% NVIDIA correction would cost SMH approximately 6–7.5 percentage points from NVIDIA alone, versus approximately 2.4 percentage points for SOXX

What Is a Semiconductor ETF?

A semiconductor ETF is an exchange-traded fund that holds a basket of companies across the chip industry, including chip designers, foundries, manufacturers, and equipment makers, and trades on a stock exchange like a single share. The fund buys and holds semiconductor positions according to its index rules, rebalances on a set schedule to maintain target weights, and you receive a proportional share of the portfolio when you buy ETF shares.

Semiconductors are the physical foundation of artificial intelligence, data centers, electric vehicles, and connected devices. The AI infrastructure buildout of 2023–2025 pushed chip demand to record levels, drawing investor attention to the sector as a way to participate in that growth without the single-stock risk of owning NVIDIA (NVDA) or Taiwan Semiconductor Manufacturing Company (TSM) outright. The structural demand drivers remain intact as of this writing: AI model training, data center expansion, and growing chip content in automotive applications. Key risks include potential normalization of AI infrastructure spending, US-China semiconductor export restrictions that could disrupt supply chains, and NVIDIA valuation concerns given its concentrated weight in SMH.

Three funds dominate the semiconductor ETF category: the iShares Semiconductor ETF (SOXX), the VanEck Semiconductor ETF (SMH), and the Invesco PHLX Semiconductor ETF (SOXQ). SOXX and SMH are the two largest by a wide margin, but they are structured differently in ways that matter for your returns and risk. This article explains exactly what those differences are and which fund fits which investor.

SOXX vs. SMH at a Glance: Side-by-Side Comparison

SOXX and SMH are the two largest semiconductor ETFs by AUM (assets under management — the total market value of all money invested in the fund), together accounting for the majority of capital invested in the semiconductor sector through exchange-traded funds.

Data as of mid-2025. Sources: iShares.com, VanEck.com, Invesco.com, ETF.com. Past performance does not guarantee future results.

The two most important differences between SOXX and SMH are their holding caps and their geographic composition. SOXX limits any single position to approximately 8% at each quarterly rebalance, distributing weight across roughly 30 US-based companies. SMH allows NVIDIA to occupy approximately 20–25% of the fund while also including TSMC (Taiwan) and ASML (Netherlands), two companies that do not appear in SOXX as significant holdings.

SMH has grown to roughly double SOXX's AUM largely because its higher NVIDIA weighting attracted significant inflows during the AI chip rally of 2023–2024. Investors seeking maximum NVIDIA and AI semiconductor exposure gravitated toward SMH, and larger AUM attracts institutional investors who require deep liquidity, creating a self-reinforcing growth cycle.

The holding cap difference explains nearly everything else: performance divergence, concentration risk, and how each fund responds when NVIDIA moves. The next section explains that mechanism in plain English.

The Most Important Difference: How Each Fund Weights Its Holdings

One structural difference separates SOXX from SMH more than any other: how each fund limits the weight of its largest single holding.

How Modified Market-Cap Weighting Works

Most index ETFs weight their holdings by company size, with bigger companies getting a bigger slice of the fund. This is called market-cap weighting. Modified market-cap weighting — a methodology that assigns larger weights to bigger companies but caps any single holding to prevent over-concentration — does the same thing but adds a ceiling on how large any one position can grow. Both SOXX and SMH use modified market-cap weighting. The only difference is where they set that ceiling.

SOXX's 8% Holding Cap: Automatic Rebalancing in Action

SOXX automatically trims any holding that grows above approximately 8% back to that level at each quarterly rebalance — the scheduled review when the index adjusts each position back toward its target weight. NVIDIA (NVDA), despite being the world's most valuable semiconductor company by market cap, represents only about 8% of SOXX at each rebalancing point. The same cap applies to every other holding, including Broadcom (AVGO) — a diversified chipmaker specializing in custom AI accelerators and networking semiconductors — which often occupies SOXX's top position by weight precisely because NVIDIA is trimmed back. This mechanism forces continuous redistribution toward the fund's other approximately 29 holdings, regardless of how dominant any single company becomes in the market.

SMH's 20% Cap: How NVIDIA Came to Dominate the Fund

SMH's holding cap sits at approximately 20%, meaning a single company can grow to occupy one-fifth of the fund before the index intervenes. Because NVIDIA's market cap surged from roughly $300 billion in early 2023 to over $2 trillion by 2024–2025, NVIDIA expanded within SMH without being trimmed back to a lower level, settling at approximately 20–25% of the fund. Roughly one in every four to five dollars you invest in SMH currently goes into NVIDIA stock (as of mid-2025, Source: VanEck.com). This is both the fund's most powerful feature and its most significant risk.

What This Means If NVIDIA Moves: The Scenario Calculation

NVIDIA Weight Comparison (mid-2025)

• SMH: approximately 20–25% of the fund
• SOXX: approximately 8% of the fund (capped at each quarterly rebalance)

The practical consequence of this difference becomes concrete when you model a NVIDIA correction. If NVIDIA stock drops 30%:

• SMH loses approximately 6–7.5 percentage points from NVIDIA alone (0.30 × 0.225 = 0.0675, using a 22.5% midpoint weight)
• SOXX loses approximately 2.4 percentage points from the same correction (0.30 × 0.08 = 0.024)

The same mechanism works in reverse. During NVIDIA's AI-driven surge in 2023–2024, SMH's higher NVIDIA weight amplified gains by 2–3x relative to SOXX's capped position. Higher concentration is simultaneously a return accelerator when NVIDIA outperforms and a drawdown amplifier when it corrects.

Now that the methodology difference is clear, the individual fund profiles show how each structure plays out in practice.

iShares Semiconductor ETF (SOXX): Fund Profile

The iShares Semiconductor ETF (SOXX), issued by BlackRock and trading on NASDAQ since July 10, 2001, is one of the oldest dedicated semiconductor funds available, with a track record spanning the dot-com bust, the 2008 financial crisis, and the AI boom.

SOXX Fund Facts

SOXX trades under the ticker SOXX on NASDAQ. BlackRock's iShares division manages the fund. It tracks the ICE Semiconductor Index (formerly known as the Philadelphia Semiconductor Index, or PHLX SOX), holds approximately 30 positions, and carries an expense ratio of 0.35% (Source: iShares Semiconductor ETF (SOXX) fund page, as of mid-2025). AUM sits at approximately $12–14 billion, substantial but roughly half the size of SMH.

The ICE Semiconductor Index: The Original Semiconductor Benchmark

SOXX tracks the ICE Semiconductor Index, which originated as the Philadelphia Semiconductor Index (SOX) at the Philadelphia Stock Exchange before Intercontinental Exchange (ICE) acquired it. This is the index financial media typically mean when they report "the semiconductor index was up 3% today"; it is widely regarded as the industry standard for measuring chip sector performance. The index covers approximately 30 US-listed semiconductor companies across chip designers, manufacturers, and equipment makers. The approximately 8% single-holding cap is a rule of the ICE Semiconductor Index itself, not a SOXX editorial decision. The fund simply tracks the index as constructed, and that index has a 20-plus year record spanning complete semiconductor cycles.

SOXX Top 10 Holdings

The semiconductor sector spans four main subsector types: fabless designers — companies that design chips but outsource manufacturing (NVIDIA, AMD, Qualcomm); IDMs (Integrated Device Manufacturers — companies that both design and manufacture their own chips, like Intel or Texas Instruments); foundries — contract chip manufacturers (TSMC); and equipment makers — companies that build the machines used to manufacture chips (Applied Materials, Lam Research, KLA, ASML). SOXX holds primarily US-based fabless designers and IDMs, with equipment makers filling a significant portion of the remaining weight.

Because SOXX caps NVIDIA at approximately 8% at each rebalance, Broadcom (AVGO) often occupies the top position in SOXX by weight. AMD (Advanced Micro Devices), the semiconductor company competing with Intel in processors and with NVIDIA in AI accelerators, is a top holding in both SOXX and SMH. Intel (INTC), the legacy IDM whose manufacturing struggles and AI chip lag have weighed on both funds, is held in both SOXX and SMH, though its declining market cap means its weight has shrunk relative to faster-growing peers.

Approximate weights as of mid-2025. Holdings capped at ~8% at each quarterly rebalance. Source: iShares.com. Holdings subject to change.

SOXX: The Case for Balanced Semiconductor Exposure

SOXX is the more internally balanced of the two funds. Its 8% holding cap prevents any single company from dominating the portfolio, regardless of how dominant that company becomes in the broader market. For investors who want semiconductor sector exposure without accepting that one-quarter of their investment rests in a single stock, SOXX delivers that structure by design.

VanEck Semiconductor ETF (SMH): Fund Profile

The VanEck Semiconductor ETF (SMH) holds approximately $22–26 billion in AUM, making it one of the largest sector ETFs in the US market and roughly double the size of SOXX.

SMH Fund Facts

SMH trades under the ticker SMH on NASDAQ. VanEck manages the fund. Its current structure dates to December 20, 2011; the pre-2011 SMH was a structurally different product (a Semiconductor HOLDRs ETF) tracking a different index, and its historical performance data cannot be used for apples-to-apples comparison with SOXX. SMH holds exactly 25 positions and carries an expense ratio of 0.35% (Source: VanEck Semiconductor ETF (SMH) fund page, as of mid-2025).

The MVIS US Listed Semiconductor 25 Index: Why "US-Listed" Is Not the Same as "US-Based"

SMH tracks the MVIS US Listed Semiconductor 25 Index, maintained by MarketVector Indexes, a subsidiary of VanEck, which creates a potential conflict of interest worth noting for investors conducting due diligence. The "25" refers to the 25 largest US-listed semiconductor companies by market cap that derive at least 50% of their revenues from semiconductors. The critical rule that most competitor content misses: "US-listed" means listed on US exchanges, not headquartered in the United States. This distinction is what allows TSMC (headquartered in Taiwan) and ASML (headquartered in the Netherlands) to qualify for inclusion. Both trade on US exchanges via ADRs (American Depositary Receipts — US-listed shares representing ownership in a foreign company), which satisfies the index's eligibility requirement. The approximately 20% single-holding cap in this index is what allows NVIDIA to grow to 20–25% of the fund without being trimmed back as aggressively as it is in SOXX.

SMH Top 10 Holdings

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest semiconductor foundry (contract manufacturer — a company that makes chips designed by other companies), is typically SMH's second-largest holding at approximately 12–15% of the fund. TSMC trades on the NYSE as an ADR under the ticker TSM. Its inclusion gives SMH coverage of both the design layer of the semiconductor value chain (via NVIDIA) and the manufacturing layer, since TSMC makes NVIDIA's, AMD's, and Apple's chips. ASML Holding (ASML), the Dutch company that holds a global monopoly on the extreme ultraviolet lithography machines required to manufacture the world's most advanced chips, is also included in SMH via its NASDAQ listing. AMD is present in both funds and does not serve as a differentiator between them.

Approximate weights as of mid-2025. Source: VanEck.com. Holdings subject to change.

SMH's International Exposure: TSMC and ASML as Structural Differentiators

Yes, SMH includes TSMC as its second-largest holding at approximately 12–15% of the fund. TSMC qualifies because the MVIS index's "US-listed" rule covers ADRs trading on US exchanges, regardless of where the company is headquartered. SOXX does not include TSMC as a significant holding because its index focuses on US-headquartered companies.

This distinction has real investor implications. SMH gives you simultaneous exposure to NVIDIA's chip design dominance and TSMC's manufacturing monopoly on leading-edge chips, the two companies that together control the most critical nodes of the AI chip supply chain. The risk counterpart is geopolitical risk — the possibility that political tensions or conflicts between nations could disrupt a company's operations or stock price. A China-Taiwan conflict scenario would disproportionately impact SMH through its direct TSMC holding, whereas SOXX carries no comparable concentrated Taiwan exposure.

SMH: The Case for Aggressive AI Semiconductor Exposure

SMH is the more aggressive of the two funds. Its higher NVIDIA weight amplified gains during the AI boom, while its TSMC position adds global foundry exposure unavailable in SOXX, but both features carry higher single-stock and geopolitical risk alongside that potential upside.

SOXX vs. SMH Performance: Which Has Better Returns?

SMH has outperformed SOXX across several recent time horizons, but the reason matters as much as the result: nearly all of the divergence traces back to the NVIDIA weight difference established in the index methodology.

Historical Returns: SOXX vs. SMH Across Market Cycles

The table below shows annualized returns across four time horizons. Verify and insert current figures from ETF.com or Morningstar at the time of publication, including the specific data date.

Past performance does not guarantee future results. All figures must be verified and dated at publication. Source: ETF.com or Morningstar. SMH's current structure dates to December 2011; 10-year returns reflect the fund in its current form only. The pre-2011 SMH tracked a structurally different index and its earlier data cannot be used for comparison with SOXX.

What Drove the Performance Difference

SMH's outperformance versus SOXX in 2023–2024 was driven by one factor: NVIDIA's AI-cycle surge. SMH's approximately 20–25% NVIDIA weight captured 2–3x more of those gains than SOXX's approximately 8% capped position. When NVIDIA's market cap grew from roughly $300 billion in early 2023 to over $2 trillion by 2024, that growth compounded inside SMH at a much higher weight than it compounded inside SOXX.

The 2022 semiconductor bear market tells a different story. SOXX showed relative resilience, declining less severely than SMH during that period, because its balanced weighting limited the single-stock drawdown contribution from any one position. This divergence in both directions reflects the same structural mechanism: SMH's higher NVIDIA weight amplifies both the upside and the downside.

Neither fund dominates across all market environments. As long as NVIDIA continues to outperform its semiconductor peers, SMH's higher NVIDIA weight will tend to produce higher returns. If NVIDIA corrects or lags, SOXX's capped weighting provides relative protection. This structural connection between index methodology and performance is what every data table in competitor articles shows without explaining; the NVIDIA weight difference is the mechanism.

Past performance does not guarantee future results.

SOXX's Track Record Advantage

SOXX has one of the longest track records of any semiconductor ETF, with data going back to July 2001 and spanning multiple complete semiconductor cycles including the dot-com bust, the 2008 financial crisis, and the 2023–2024 AI boom. SMH's current structure dates to December 2011, giving it a shorter continuous track record under its current index methodology.

Risk Assessment: What Could Go Wrong With Each Fund?

Both SOXX and SMH carry meaningful risk, but they carry different types, and understanding which risk applies to each fund is what allows you to choose the one that matches your tolerance.

Sector-Level Risk: Both Funds Are High-Beta by Design

Both SOXX and SMH carry a beta — a measure of how much a fund moves relative to the broader market — above 1.3 relative to the S&P 500. A beta of 1.3 means the fund has historically moved roughly 30% more than the broader market in both directions (verify current beta values at ETF.com or Morningstar). During the 2022 semiconductor bear market, SOXX declined approximately 35% from peak to trough while SMH declined approximately 40%, compared to roughly 20% for a broad S&P 500 index fund over the same period. These are sector-concentrated funds by design. The higher volatility is not a flaw; it is the structural consequence of owning only one sector instead of the full market.

Single-Stock Concentration Risk: NVIDIA's Weight in SMH

Concentration risk is the risk that your portfolio is too dependent on a single stock, sector, or geography, meaning a problem with that one investment disproportionately damages your overall returns. Both SOXX and SMH are sector-concentrated by design, which is accepted and expected. The more meaningful variable is single-stock concentration within the fund.

Buying SMH is, in effect, buying an approximately 20% position in NVIDIA with a semiconductor basket around it. If NVIDIA corrects 30%, that single stock costs SMH approximately 6–7.5 percentage points before any other holding moves. SOXX's 8% cap is specifically designed to prevent this dynamic; no matter how dominant NVIDIA becomes, SOXX trims it quarterly and redistributes toward the other approximately 29 holdings. SMH's larger decline during the 2022 bear market reflected this higher single-stock NVIDIA exposure, while SOXX's cap provided relative protection.

Geopolitical Risk: Taiwan Strait Exposure in SMH

SMH carries geopolitical risk that SOXX largely avoids. TSMC's Taiwan headquarters means that any deterioration in China-Taiwan relations would disproportionately impact SMH through two channels: the direct TSMC holding (approximately 12–15% of the fund) and NVIDIA's dependence on TSMC for manufacturing its leading-edge chips. A Taiwan Strait conflict scenario would affect SOXX too given NVIDIA's presence, but at the 8% capped weight rather than at SMH's compounded exposure through both NVIDIA and TSMC. SOXX's US-focused composition does not carry this same concentrated geographic risk.

Liquidity and Trading: Which Is Better for Active Investors?

SMH is the more liquid of the two funds by every measurable trading metric.

SMH's approximately $22–26 billion in AUM supports daily trading value that often exceeds $1–2 billion, making it one of the most actively traded ETFs across all sectors. This volume sustains a highly active options market with tighter options bid-ask spreads — the difference between the price you can buy and sell an ETF at any given moment — and more liquid strike-and-expiry combinations, making SMH the preferred vehicle for options traders and tactical semiconductor allocators. SOXX also has high daily volume and an active options market, but it trails SMH on both measures.

Tracking error — the degree to which an ETF's returns diverge from its benchmark index — is low for both funds, typically under 0.10% annualized, reflecting efficient index replication at large fund scale. SMH's larger AUM typically produces marginally tighter spreads and marginally lower tracking error, though the differences are negligible for retail investors transacting in standard lot sizes.

For long-term buy-and-hold investors, neither fund's liquidity advantage is a meaningful factor. Both have more than enough market depth for retail-sized positions.

Cost Comparison: Expense Ratios and the SOXQ Alternative

SOXX and SMH charge identical expense ratios of 0.35% annually, making cost a non-differentiator between these two specific funds.

The expense ratio — the annual fee, expressed as a percentage of your investment, automatically deducted from fund assets; you never pay it as a separate bill — is 0.35% for both SOXX (Source: iShares.com, as of mid-2025) and SMH (Source: VanEck.com, as of mid-2025). This translates to $3.50 per year for every $1,000 invested. Both funds sit below the sector ETF category average of approximately 0.47%, though neither approaches the minimal fees of broad market funds like Vanguard's S&P 500 ETF (VOO at 0.03%). Because expense ratios are tied between SOXX and SMH, your fund selection should rest entirely on the structural differences covered in the sections above.

SOXQ Cost Advantage SOXQ (Invesco PHLX Semiconductor ETF) charges 0.19% annually (Source: Invesco PHLX Semiconductor ETF (SOXQ) fund page, as of mid-2025), nearly half the cost of SOXX and SMH, and tracks the same ICE Semiconductor Index as SOXX.

On a $10,000 investment held for 10 years, SOXQ saves approximately $170 in fees versus SOXX at 0.35%, before accounting for the compounding effect on those savings themselves.

The trade-off with SOXQ is lower AUM (approximately $500 million to $1 billion) and less daily liquidity than either SOXX or SMH. For a long-term buy-and-hold investor whose primary concern is minimizing annual costs, that trade-off is worth evaluating seriously.

Other Semiconductor ETF Alternatives: Beyond SOXX and SMH

Three semiconductor ETF alternatives are worth knowing about if SOXX and SMH do not match your investment objectives.

SOXQ (Invesco PHLX Semiconductor ETF) is the most actionable alternative for cost-conscious investors. It tracks the same ICE Semiconductor Index as SOXX, meaning the same approximately 30 US-based holdings, the same approximately 8% holding cap, and the same quarterly rebalancing methodology, at 0.19% versus SOXX's 0.35%. SOXQ is not a lower-cost SMH alternative; it tracks a different index entirely and does not include TSMC or ASML. SOXQ is better than SMH on annual cost; SMH is better than SOXQ on liquidity, global exposure, and NVIDIA concentration. For a fee-sensitive, long-term buy-and-hold investor who wants SOXX's balanced methodology at lower cost and can accept less daily trading volume, SOXQ is a compelling choice.

PSI (Invesco Dynamic Semiconductors ETF, approximately 0.56% expense ratio) uses an actively screened methodology rather than a passive index, selecting semiconductor holdings based on fundamental, technical, and risk factors rather than market cap alone, which distinguishes it from the passive index funds in this comparison.

FTXL (First Trust Nasdaq Semiconductor ETF, approximately 0.60% expense ratio) tracks the Nasdaq US Smart Semiconductor Index using a factor-weighted methodology that scores companies on growth, value, and volatility metrics rather than pure market cap, resulting in the highest annual fee among the options listed here.

Neither SOXX nor SMH is equal-weighted; both use modified market-cap weighting with caps, and SOXX's approximately 8% cap is the closest available option for investors who want more balanced exposure without pure equal weighting.

Portfolio Fit: How These Semiconductor ETFs Work in a Broader Portfolio

Both SOXX and SMH overlap significantly with broad technology ETFs. Investors who already hold QQQ (Invesco Nasdaq-100) or VGT (Vanguard Information Technology ETF) already own NVIDIA, AMD, Broadcom, and Qualcomm at meaningful weights. Adding SOXX or SMH on top of an existing QQQ or VGT position creates concentrated double-weighting in the same companies, compounding single-stock risk rather than reducing it. These semiconductor ETFs work best as satellite holdings for investors who specifically want to overweight the chip sector beyond what their existing broad tech exposure already provides.

Both SOXX and SMH are structured as index ETFs and have historically been tax-efficient vehicles, primarily because the in-kind creation/redemption mechanism allows fund managers to minimize taxable capital gains distributions. SOXX's more frequent rebalancing activity, driven by its approximately 8% cap requiring quarterly trimming of outperforming holdings, may generate slightly more taxable capital gains distributions than SMH over time. Investors holding either fund in a taxable account should review each fund's capital gains distribution history on the respective issuer website before investing. Past distributions do not predict future distributions.

SOXX vs. SMH: Which Semiconductor ETF Is Right for You?

The choice between SOXX and SMH ultimately rests on one variable: how much NVIDIA concentration risk you are willing to accept in exchange for potential AI-driven outperformance.

Choose SMH If:

• You are bullish on NVIDIA specifically and want maximum AI chip exposure. SMH allocates approximately 2–3x more to NVIDIA than SOXX, meaning NVIDIA's outperformance benefits you proportionally more in SMH.
• You want global semiconductor exposure that includes the foundry and equipment layers. SMH's TSMC position gives you manufacturing-layer exposure, the company that makes NVIDIA's chips, alongside the design-layer exposure both funds share. ASML's inclusion adds the European equipment layer. Neither is available in SOXX.
• You want the deepest liquidity and most active options market. SMH's larger AUM and daily volume make it the preferred vehicle for tactical trades, larger position sizes, and options strategies.
• You already hold broad US semiconductor exposure and want the international dimension as a complement. SMH's non-US holdings (TSMC, ASML) extend the fund beyond what US-focused products provide.
• You are comfortable with roughly one in four dollars going into a single company. If NVIDIA's continued dominance is your core conviction, SMH is built around that thesis.

Choose SOXX If:

• You prefer no single holding to exceed approximately 8% of the fund. SOXX's cap forces quarterly redistribution regardless of NVIDIA's market cap growth, preventing any one company from dominating the portfolio.
• You want the longest-tenured semiconductor benchmark. SOXX's track record extends to July 2001, spanning more complete market cycles than any other fund in this comparison.
• NVIDIA concentration risk concerns you. Whether because of valuation concerns, cyclical correction risk, or single-stock event risk, SOXX's structure limits the damage a sharp NVIDIA decline can inflict.
• You want US-focused semiconductor exposure without Taiwan Strait geopolitical risk. SOXX's US-headquartered company focus excludes the concentrated Taiwan exposure that TSMC's presence creates in SMH.
• You are a long-term investor who values structural balance over single-stock momentum. SOXX's design does not require any one company to keep outperforming; the cap forces the fund to stay balanced across the semiconductor sector.

Consider SOXQ If:

• You want SOXX's index methodology at nearly half the annual cost. SOXQ tracks the same ICE Semiconductor Index as SOXX at 0.19% versus 0.35%.
• You are a long-term, buy-and-hold investor for whom compounded fee savings over 10–20 years outweigh marginal liquidity differences. On a $10,000 position held 20 years, the fee difference compounds to a meaningful dollar amount.
• You are building a new position and have not already established a cost basis in SOXX. Starting fresh in SOXQ captures the full fee savings from day one.
• You are fee-sensitive but do not need the international exposure (TSMC, ASML) that SMH provides. If your goal is SOXX's balanced, US-focused semiconductor methodology at the lowest possible cost, SOXQ delivers that.

This content is for informational and educational purposes only. It does not constitute personalized investment advice, a recommendation to buy or sell any security, or a solicitation of any investment. Past performance of any fund does not guarantee future results. All investments involve risk, including the possible loss of principal. Consult a qualified financial professional before making any investment decision.

Frequently Asked Questions

What is the difference between SOXX and SMH?

SOXX (iShares) tracks the ICE Semiconductor Index with an approximately 8% holding cap and holds approximately 30 US-based companies. SMH (VanEck) tracks the MVIS US Listed Semiconductor 25 Index with an approximately 20% cap, holds 25 companies, and includes TSMC (Taiwan) and ASML (Netherlands). The central difference is NVIDIA's weight: approximately 8% in SOXX versus approximately 20–25% in SMH (as of mid-2025, Sources: iShares.com, VanEck.com).

How much of SMH is NVIDIA?

As of mid-2025, NVIDIA represents approximately 20–25% of SMH, making it the fund's largest holding by a wide margin (Source: VanEck.com). About one in every four to five dollars invested in SMH goes into NVIDIA stock. In SOXX, NVIDIA is capped at approximately 8% at each quarterly rebalance (Source: iShares.com). This weight difference is the primary driver of performance divergence between the two funds.

Does SMH include TSMC?

Yes. TSMC (Taiwan Semiconductor Manufacturing Company) is typically SMH's second-largest holding at approximately 12–15% of the fund (Source: VanEck.com, mid-2025). TSMC qualifies because its ADR (American Depositary Receipt) trades on the NYSE under the ticker TSM, satisfying the MVIS index's "US-listed" requirement despite TSMC being headquartered in Taiwan. SOXX does not include TSMC as a significant holding because its index focuses on US-headquartered companies.

Is there a cheaper semiconductor ETF than SOXX or SMH?

Yes. SOXQ (Invesco PHLX Semiconductor ETF) charges 0.19% annually and tracks the same ICE Semiconductor Index as SOXX, while both SOXX and SMH charge 0.35% (Source: Invesco.com, as of mid-2025). The trade-off is lower AUM and less daily liquidity with SOXQ. SOXQ is a lower-cost SOXX alternative, not a lower-cost SMH alternative, as it tracks a different index entirely.

Has SMH outperformed SOXX historically?

SMH has outperformed SOXX across several recent time horizons, primarily because NVIDIA's approximately 20–25% weight in SMH amplified returns during the AI chip rally of 2023–2024. However, SOXX showed relative resilience during the 2022 semiconductor bear market due to its more balanced weighting. Neither fund dominates across all market cycles; performance has shifted based on whether NVIDIA was leading or lagging. Past performance does not guarantee future results.

Is semiconductor ETF investing risky?

Both SOXX and SMH carry a beta above 1.3 relative to the S&P 500, meaning historical moves of roughly 30% more than the broader market in both directions (verify current beta at ETF.com or Morningstar). During the 2022 semiconductor bear market, SOXX declined approximately 35% peak-to-trough while SMH declined approximately 40%. These sector-concentrated funds carry significantly higher volatility than broad-market index ETFs by design.

Is SMH more concentrated than SOXX?

Yes, in two distinct ways. First, SMH holds 25 companies versus approximately 30 in SOXX. Second, SMH's largest holding (NVIDIA) represents approximately 20–25% of the fund (Source: VanEck.com, mid-2025), while SOXX caps any single holding at approximately 8% at each quarterly rebalance (Source: iShares.com). SMH is therefore more sensitive to NVIDIA's price movements in both upward and downward directions.

Which semiconductor ETF is best for long-term investors?

For long-term investors, the choice depends on conviction about NVIDIA. If you believe NVIDIA's dominance will persist and compound, SMH's higher weighting maximizes that exposure. If you prefer structural balance that does not depend on any single stock continuing to outperform, SOXX's 8% cap provides more consistent internal distribution. SOXQ offers the same ICE Semiconductor Index as SOXX at 0.19% versus 0.35%, a meaningful cost advantage compounded over 10–20 years.

Disclosure: This content is for informational and educational purposes only and does not constitute personalized investment advice, a recommendation to buy or sell any security, or a solicitation of any investment. All data cited is approximate and subject to change; verify current figures at iShares.com, VanEck.com, Invesco.com, and ETF.com before making any investment decision. Past performance of any fund does not guarantee future results. All investments involve risk, including the possible loss of principal. Consult a qualified financial professional before making any investment decision.