balance Semiconductor ETFs are having a moment. AI, data centers, EVs, and the U.S.-China chip war have all converged to make chipmakers one of the most-watched sectors in the market. And when investors go looking for semiconductor exposure, two names come up every time: SMH and SOXX. The ETF.com comparison tool for these two funds…
Semiconductor ETFs are having a moment. AI, data centers, EVs, and the U.S.-China chip war have all converged to make chipmakers one of the most-watched sectors in the market. And when investors go looking for semiconductor exposure, two names come up every time: SMH and SOXX.
The ETF.com comparison tool for these two funds is drawing over 1,600 views a month — a clear signal that investors want a definitive answer. Here it is.
The Basics: What Are SMH and SOXX?
SMH — VanEck Semiconductor ETF SMH tracks the MVIS US Listed Semiconductor 25 Index, a market-cap-weighted index of the 25 largest U.S.-listed semiconductor companies. Despite the “US Listed” in the name, SMH holds significant international exposure — most notably Taiwan Semiconductor Manufacturing (TSM) and ASML Holding (ASML), two of the most critical companies in the global chip supply chain. SMH has approximately $22 billion in assets under management and charges an expense ratio of 0.35%.
SOXX — iShares Semiconductor ETF SOXX tracks the ICE Semiconductor Index, a modified market-cap-weighted index of 30 semiconductor companies listed on U.S. exchanges. It caps individual position sizes to prevent excessive concentration and rebalances quarterly. SOXX manages approximately $12 billion in assets and also charges 0.35%.
Holdings: Where They Overlap and Where They Diverge
Both ETFs share the same core of dominant U.S. chipmakers — Nvidia (NVDA), Broadcom (AVGO), AMD, Qualcomm (QCOM), and the major semiconductor equipment names like Applied Materials (AMAT), Lam Research (LRCX), and KLA Corporation (KLAC). If you own both, you’re largely duplicating your core holdings.
The meaningful differences come down to three areas:
1. International exposure. SMH’s two largest or near-largest positions are often TSM and ASML — a Taiwanese foundry and a Dutch lithography equipment maker. SOXX is more U.S.-centric, with TSM as a smaller position and no ASML at the top of the index. If you want direct exposure to the global chip manufacturing supply chain — including the dominant foundry for advanced AI chips (TSMC) and the only maker of EUV machines (ASML) — SMH is the stronger vehicle.
2. Concentration. SMH holds 25 names vs. SOXX’s 30. SMH’s top 10 holdings typically account for around 60–65% of the fund, while SOXX’s modified weighting caps its top holdings to reduce single-name risk. If you’re comfortable with concentration in the largest names, SMH gives you more of what you want. If you prefer a slightly more distributed approach, SOXX’s cap methodology provides that.
3. Nvidia weighting. In a world where NVDA is the defining AI infrastructure stock, its weighting matters. SMH historically carries a heavier NVDA position than SOXX, given its pure market-cap approach. In an AI bull market, this has been a tailwind for SMH’s outperformance.
Performance: How Have They Done?
Over most multi-year periods, SMH has modestly outperformed SOXX — largely due to its higher concentration in mega-cap winners like Nvidia and its TSMC exposure. In 2024 and into 2026, SMH’s AI-heavy positioning rewarded investors who were willing to take on that concentration risk.
That said, the difference is rarely dramatic. In years when large-cap semiconductors lag and mid-cap chip designers outperform, SOXX’s broader exposure and modified weighting have allowed it to keep pace or pull ahead. The two funds are highly correlated — don’t expect divergence to save you in a semiconductor downturn.
Fees: A Draw
Both SMH and SOXX charge 0.35% annually. At this price point, fees are not a differentiating factor. The iShares Semiconductor ETF (SOXX) also has a sibling — SOXQ, with an expense ratio of just 0.19% — which is worth considering for pure cost-conscious investors who prefer SOXX’s index methodology.
Liquidity: Advantage SMH
SMH consistently trades higher daily dollar volume than SOXX. For active traders and institutional investors, SMH’s tighter bid-ask spreads and deeper liquidity make it the operationally superior choice. For long-term buy-and-hold investors, this is a minor consideration.
The Verdict: Which Should You Buy?
Buy SMH if: You want maximum exposure to the global semiconductor supply chain, you’re comfortable with concentrated bets on the largest winners (Nvidia, TSMC, ASML), and liquidity matters to you. SMH is the sharper, more opinionated expression of the semiconductor thesis.
Buy SOXX if: You want broader U.S.-centric semiconductor coverage with less single-name concentration risk. SOXX’s modified weighting provides a degree of diversification that SMH deliberately avoids. Consider SOXQ (0.19% expense ratio) if you want the same exposure at a lower cost.
Bottom line: For most investors playing the AI and semiconductor theme in 2026, SMH is the stronger choice — its global supply chain exposure, higher Nvidia weighting, and superior liquidity make it the go-to fund. But if concentration keeps you up at night, SOXX is a perfectly sound alternative that will closely track the same sector.
See the comparison on ETF.com’s Comparison Tool
This article was generated with the assistance of artificial intelligence and reviewed by ETF.com staff.
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