ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Education Channel
  2. With These ETFs, Ride Out Semiconductor Lethargy
ETF Education Channel
Share

With These ETFs, Ride Out Semiconductor Lethargy

Tom LydonMar 16, 2023
2023-03-16

The Invesco PHLX Semiconductor ETF (SOXQ B+) is higher by nearly 18% year-to-date, indicating that chip equities are rebounding from a dismal 2022 showing. Still, there’s a dichotomy of challenges and opportunities facing investors considering semiconductor equity exposure.

Investors looking to split the difference by not holding dedicated chip allocations while having some exposure to the industry can consider exchange traded funds such as the Invesco QQQ Trust (QQQ B+) and the Invesco NASDAQ 100 ETF (QQQM B).

QQQ and QQQM both track the Nasdaq-100 Index (NDX), which is home to multiple semiconductor stocks. Translation: The ETFs have solid chip equity exposure but are not dedicated to that theme. That could be a desirable trait in the current market environment.

“In Europe, the lack of a catastrophic energy crisis in the current winter season has also prompted a reconsideration among economic forecasters of the depth of a potential recession. And in China, with the economy on its way to fully reopening, an additional global economic tailwind waits in the wings. With inflation, interest rates and growth all stabilizing, 2023 could very well be a year of recovery for the global economy, and for the semiconductor industry in particular,” according to Nasdaq research.

The other side of the equation is that China’s economic rebound could prove lumpy as 2023 moves along, and it’s possible that interest rate tightening in major developed economies, including the U.S., won’t have the desired effect of engineering a soft landing. Rather, some market observers believe the landing will be uncomfortable.

Additionally, it’s possible that, due to weakness in the personal computer (PC) segment, chip demand will contract this year. On the bright side, the long-term trend for the industry is attractive, particularly with end markets beyond PCs emerging.

“Thanks to much faster growth in Automotive (14% CAGR), Servers/Datacenters/Storage (13%), Industrial Electronics (12%), Consumer Electronics (9%), Wired/Wireless Infrastructure (8%), and Smartphones (6%), PCs (3%) will be the 5th- biggest end market for semis by the end of the decade,” noted Nasdaq.

Adding to the allure of chip equity exposure is that cost of admission is attractive from a valuation perspective — a concept enhanced by QQQ and QQQM because a variety of the ETFs’ non-chip holdings are also undervalued.

“Looking at valuations over the same time frame, one can see the sector currently trading notably below its index- weighted average trailing P/E of 22.2 since year-end 2010, with a year-end 2022 P/E of 18.2. EV/EBITDA multiples are also very reasonable, at 11.5 vs. a long-run average of 12.2 since 2010,” concluded Nasdaq.

For more news, information, and analysis, visit the ETF Education Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X