Semiconductor Stocks

  • Semiconductor stocks benefit from the Fourth Industrial Revolution megatrend
  • Semiconductors are the brains behind modern tech innovation
  • Semiconductor stocks by VanEck profit from high barriers to entry
  • They are highly volatile, and this risk could be mitigated by investing in a diversified ETF or fund

Semiconductor Stocks Amid a Global Supply Squeeze

Semiconductors are vital to the modern economy and semiconductor stocks are a way for investors to track their profits, as the production of increasingly sophisticated chips grows.

Quite simply, semiconductors are the brains of the brains of modern electronics. They are at the core of modern communications, computing, healthcare, military systems, transportation, clean energy and countless other applications. In fact, they have become critical to any country’s economic growth, competitiveness and even national security.

Yet there is a supply shortage, as shown most evidently by the shortages in the auto industry during the pandemic. To boost manufacturing capacity, the big semiconductor stocks like TSMC, Samsung and Intel are substantially increasing their investments in fabrication plants (known as ‘fabs’) and next-generation chip miniaturization.1


1 https://www.eiu.com/n/chip-makers-increase-investment-for-2022-amid-shortage/

Semiconductor Stocks R&D Reaches a New Record

Research and development spending of semiconductor stocks is increasing fast. It’s forecast to grow 9% in 2022 to an all-time high of $80.5 billion after climbing by 13% in 2021 to $71.4 billion, according to IC Insights’ 2Q Update to the McClean Report 2022.2

Looking further forward, the report anticipates spending by semiconductor stocks will rise by a compound annual growth rate of 5.5% between 2022 and 2026 to $108.6 billion.

Semiconductor stocks industry leaders are raising their R&D spending most. IC Insights’ 2021 R&D ranking shows the top 10 collectively increased spending by 18% to $52.6 billion, which was about 65% of the industry total.

Such high R&D spending creates economic moats, protecting the profits of the big semiconductor companies and helping the performance of semiconductor stocks.


2 https://www.icinsights.com/news/bulletins/Industry-RD-Spending-To-Rise-9-After-Hitting-Record-In-2021/

Investing in Semiconductor Stocks

With such high barriers to entry, there is a rationale for investing in the largest and most liquid semiconductor stocks globally. These include not just the giant semiconductor manufacturers but also the companies that make the equipment for producing them, which is itself in short supply or engage in chip design.

They include well-known companies from around the globe such as TSMC, Nvidia, ASML Holding, Advanced Micro Devices and Qualcomm.

Types of Semiconductor Stocks

Reflecting the diversity of the industry, a range of types of semiconductor stocks exist. They are often classified as follows:

Semiconductor Stocks Investment Considerations

One should be careful when selecting semiconductor stocks to invest in. Some considerations below:

In times of market distress, smaller stocks could become more difficult to sell at market prices. Generally, liquidity risk could be reduced by investing in the larger semiconductor stocks.

Risks of Investing in Semiconductor Stocks

Even though the sector has been growing relentlessly over the last years, it has typically been cyclical. Demand might be saturated at some moment in time. Rather than picking just a few semiconductor stocks, investing globally across the whole sector could help to minimize the risk.

Risk: You may lose money up to the total loss of your investment due to the Main Risk Factors such as equity market risk, foreign currency risk and risk of investing in the Semiconductor Industry, which are described below and in the sales prospectus.

Diversified Investing in Semiconductor Stocks

The VanEck Semiconductor UCITS ETF offers a relatively low-cost, diversified way to get exposure to semiconductor stocks. It invests in 25 semiconductor stocks from across the globe, listed in the USA.

VanEck Semiconductor UCITS ETF

ISIN: IE00BMC38736


  • The first Semiconductor ETF of Europe
  • Semiconductor Stocks by VanEck are pure-play
  • They have high quality – physical replication and no inclusion of securities lending
  • They involve 0.35% total expense ratio
  • Our Semiconductor Stocks also promote environmental and social characteristics (SFDR Article 8)

Risk indication: 7 out of 7

Lower risk: Typically lower reward

Higher risk: Typically higher reward

Main Risk Factors of Semiconductor Stocks

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The prices of the securities included in the Fund can be impacted by the risks in relation to investment in the securities market, such as certain economic circumstances and an unforeseen decrease in value. An investment in the Fund may cause financial loss.

For more information on risks, please see the “Risk Factors” section of the relevant Fund’s prospectus, available on www.vaneck.com.

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