Time for Semiconductor ETFs on Spike in July Sales?

In July, global semiconductor sales reached $43.2 billion, reflecting a 2.3% month-over-month increase compared to June’s figures of $42.2 billion. This report is sourced from the Semiconductor Industry Association (SIA) and marks the fourth consecutive month of sales growth following a 1.7% increase in June.

Steady Growth in 2023

John Neuffer, President, and CEO of SIA, noted that the semiconductor market has been experiencing consistent month-to-month growth throughout the year. This positive trend has been maintained with July’s sales upswing, marking five consecutive months of growth.

Strong Second Quarter Performance

The second quarter of the year proved to be robust for the semiconductor industry, with total sales amounting to $124.5 billion. This figure represented a significant 4.7% increase compared to the first quarter.

Although sales are still below the figures from the previous year, industry experts hold an optimistic outlook for a market rebound, aligning with earlier predictions.

Factors Affecting Demand

 2022 Slowdown: The demand for semiconductors began to slow down in the latter half of 2022. This decline followed a period of strong sales in 2020 and 2021, driven by the remote working trend sparked by the COVID-19 pandemic.

 Inflation Impact: The semiconductor industry was further affected by higher prices resulting from the Federal Reserve’s aggressive monetary tightening policies aimed at controlling multi-decade-high inflation.

 Geopolitical Factors: Various geopolitical tensions and the lingering effects of the pandemic also contributed to the decline in sales during the latter half.

A Bright Outlook for Semiconductors On AI Boom

As inflation subsides and geopolitical tensions ease, the semiconductor market is poised for resurgence. The AI boom will make the matter easier. The expanding influence of transformative technologies like artificial intelligence, the Internet of Things, and machine learning sustains semiconductor demand. The ever-increasing global adoption of consumer electronics remains a critical driver.

ETFs in Focus

Against this backdrop, below we highlight a few semiconductor ETFs that could be tapped now. These ETFs are available at a relatively cheaper valuation.

VanEck Semiconductor ETF (SMH) – Up 2.2% Past Month; P/E: 20.35X

Invesco PHLX Semiconductor ETF (SOXQ) – Up 1% Past Month; P/E: 15.08X

First Trust Nasdaq Semiconductor ETF (FTXL) – Up 1% Past Month; P/E: 18.91X

iShares Semiconductor ETF (SOXX) – Up 0.6% Past Month; P/E: 20.34X
VanEck Semiconductor ETF (SMH): ETF Research Reports

iShares Semiconductor ETF (SOXX): ETF Research Reports

First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports

Invesco PHLX Semiconductor ETF (SOXQ): ETF Research Reports

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Zacks Investment Research

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