The Semiconductor ETF Has Lost a Quarter of Its Value Since June. Buy It Now and Hold It Through 2030.
2026-11-15 01:14
•Daniel Sparks •The Motley Fool
••••• •••••• Axe Cap view
Semiconductor Selloff: Is Now the Time for South African Investors?
After a 25% drop, the semiconductor ETF looks cheaper but comes with notable risks for rand-based investors.
The VanEck Semiconductor ETF (SMH) slumped 25% since June, mainly on concerns over slower AI spending and a disappointing Qualcomm guidance. Valued at about 28 times earnings, it matches the broader S&P 500 multiple but rests on chip sales growing 24% quarter-on-quarter — a healthy rate. Locally, the story boils down to USD/ZAR exposure and select exposures within SMH’s top holdings, including Nvidia and Taiwan Semiconductor. These two account for over a quarter of the fund and bring concentration risk. For South Africans, the rand’s moves could either amplify or soften returns, especially if global tech sentiment shifts fast. Beware also that Qualcomm’s recent weak outlook could hint at a peak in chip earnings growth as supply finally catches demand. If you want exposure to tech innovation via semi stocks, consider the fund carefully but size your exposure. Given the currency swings and concentration, I’m watching USD/ZAR for entry points and prefer trimmed positions. this is just our opinion and not financial advice
Watch USD/ZAR for better entry points and hold a modest position in SMH, trimming if the rand weakens sharply. Avoid overconcentration in Nvidia or Taiwan Semiconductor exposure locally.
- SMH
- USD/ZAR
- earnings peak as chip supply meets demand
- fund concentration in Nvidia and Taiwan Semiconductor
- rand volatility impacting returns
6/10
The VanEck Semiconductor ETF (SMH) has fallen 25% from its June peak to around $502, driven by post-election AI spending concerns and weak guidance from Qualcomm. However, the author argues it's now attractively valued at 28x earnings (matching the S&P 500) while chip sales continue growing at 24% quarter-over-quarter. The main risks are concentration in Nvidia and Taiwan Semiconductor (26% combined) and potential earnings peak as supply catches up with demand.
Our take is based on reporting first published by The Motley Fool.