This Semiconductor ETF Is Up 58% This Year and Doesn’t Own TSMC

The VanEck Fabless Semiconductor ETF (SMHX) has gained 58.48% year-to-date through July 6, 2026, delivering a remarkable performance despite owning no shares of Taiwan Semiconductor Manufacturing (TSMC), the world's largest chipmaker.

Reasons for the Rally

The fund's strong performance stems from its focus on fabless semiconductor companies—those that design chips but outsource manufacturing. Top holdings include AMD (AMD) and Qualcomm (QCOM), both benefiting from surging demand for AI and high-performance computing chips.

No TSMC Exposure

SMHX is designed to exclude manufacturers like TSMC, allowing it to concentrate on design firms with higher margins and faster growth. This strategy has paid off amid the current AI boom.

Market Context

The rally comes as the broader tech and semiconductor sectors attract significant investor interest, with expectations of continued growth driven by AI infrastructure spending. SMHX has outperformed many peers in the same space.

What This Means for Investors

SMHX's performance highlights the strength of the fabless business model in semiconductors, but investors should be mindful of sector concentration risks and market volatility.