Jacqueline Burton
Explore Opportunities with Fabless Innovation
The semiconductor sector has dazzled in 2024, with the VanEck Semiconductor ETF (SMH) seeing a stellar increase of 43.60% by late December. Yet, there’s intriguing buzz around its fabless cousin, the VanEck Fabless Semiconductor ETF (SMHX), as a smart investment move for 2025.
Making its market debut in August, the SMHX ETF tracks the MarketVector™ US Listed Fabless Semiconductor Index. This fund uniquely spotlights companies specializing in the design and innovation of semiconductor chips, while subcontracting their production to foundries. The strategy embraces industry giants like Nvidia and Broadcom, which make up over 38% of SMHX’s lineup, merging novel semantics with household names.
Shining Potential in 2025
Replicating the semiconductor sector’s impressive 2024 success in 2025 may be ambitious, yet growth prospects appear promising. A major driver is artificial intelligence (AI), anticipated to significantly elevate the semiconductor industry. SMHX presents an appealing investment angle by participating in sectors interlinked with AI, such as cloud computing and cybersecurity.
Beyond enabling digital robustness, these sectors also benefit from global investments and policy endorsements. Emerging technologies like Small Modular Reactors (SMRs) cater to the energy demands of AI-heavy operations, hinting at a sustainable high-tech future.
Looking Ahead
The upcoming year holds exciting possibilities, fueled by supportive policies and stronger governmental backing across technology sectors, including AI and semiconductors. As real-time AI facilitates breakthroughs across diverse fields like autonomous driving and health tech, semiconductors remain central to innovation. Hence, the SMHX fund could be an astute component for forward-looking investors.
Why Fabless Semiconductor Investments Could Dominate 2025
The semiconductor industry displayed remarkable performance in 2024, exemplified by the VanEck Semiconductor ETF (SMH) and its impressive growth of 43.60% by the end of the year. However, as we look towards 2025, the spotlight is turning to the fabless semiconductor sector, particularly with the introduction of the VanEck Fabless Semiconductor ETF (SMHX). This novel ETF presents an innovative approach by concentrating exclusively on companies that design and innovate semiconductor chips, without manufacturing them, a method known as “fabless.”
Features and Growth Prospects of SMHX
The SMHX ETF made waves when it launched in August, tracking the MarketVector™ US Listed Fabless Semiconductor Index. This index is particularly intriguing because it brings together industry titans such as Nvidia and Broadcom, which collectively represent over 38% of the ETF’s composition. These companies are renowned for their design prowess, leveraging cutting-edge technology to stay at the forefront of semiconductors.
Growth Drivers: As we transition into 2025, a significant growth driver is the explosion of artificial intelligence (AI). AI not only fuels demand for sophisticated semiconductor solutions but also extends its influence into related fields like cloud computing and cybersecurity. This presents a fantastic opportunity for SMHX investors to tap into these booming sectors.
Predictions and Innovations
The new year is poised to harness transformative technologies bolstered by supportive global policies and increased governmental backing. Sectors intertwined with AI, such as autonomous driving and health technology, showcase the ongoing breakthroughs powered by semiconductors. The SMHX ETF positions itself as a strategic component for tech-savvy investors looking to capitalize on these advancements.
Emerging Technologies: Small Modular Reactors (SMRs) are among the innovations addressing the power needs of AI-intensive applications, emphasizing a sustainable and high-tech future. The utility of such technologies hints at substantial growth potential within the fabless semiconductor space.
Conclusion
Looking ahead, the continued support from policies and the rise of real-time applications in AI signals a robust potential for the fabless semiconductor sector. For those considering investments in technology and semiconductor ETFs, the SMHX fund provides an attractive prospect. With a focus on design and innovation, it aligns with emerging trends and demands, making it a compelling choice for forward-looking investors.
For more information on semiconductor investments, visit VanEck’s official website.
