The Global X Semiconductor ETF (ASX: SEMI) has had a rough month, with its unit price sliding almost 15% in value. While the ETF is still up 37% from a year ago, this is one of the biggest declines in recent times.
The Global X Semiconductor ETF has been under pressure due to global market jitters and concerns about slowing demand for technology products. Additionally, there's worry that excitement about artificial intelligence (AI) has caused the prices of some AI-related shares to go up a little too much.
For investors, this sharp drop raises an important question: Is this exchange-traded fund (ETF) on the verge of a rebound?
Let's find out!
Investing in global leaders in the semiconductor industry
The Global X Semiconductor ETF aims to invest in leading companies involved in the design, manufacturing, and sale of semiconductors. These tiny chips are the backbone of modern technology, powering everything from smartphones and computers to electric vehicles (EV) and renewable energy systems.
The SEMI ASX ETF provides diversified exposure to various global semiconductor giants. This diversification helps to spread risk while allowing investors to tap into the growth potential of an industry that is crucial to the global economy.
As of 12 August, the five largest holdings of the SEMI ETF are as follows:
- Taiwan Semiconductor Manufacturing Co Ltd (TPE: 2330): 11.38% of net assets
- Broadcom Inc (NASDAQ: AVGO):10.64% of net assets
- ASML Holding (NASDAQ: ASML): 9.89% of net assets
- Nvidia Corp (NASDAQ: NVDA): 9.72% of net assets
- Advanced Micro Devices Inc (NASDAQ: AMD): 6.61% of net assets
The ETF charges management costs of 0.45% per annum. While this is higher than many other ASX ETFs, it is slightly cheaper than the Betashares Nasdaq 100 ETF (ASX: NDQ), which charges 0.48% and provides technology sector focus, similar to the SEMI ETF.
All the eyes are on Nvidia's upcoming quarterly result
Nvidia's results announcement, scheduled for 28 August, will be the next important event for investors in the semiconductor sector.
While global technology companies such as Google parent Alphabet and EV giant Tesla have reported mixed earnings so far, it's important to note that many of them emphasised their continued investment in AI infrastructure and data centres.
In addition to actual business outcomes from Nvidia, there will be many valuable comments related to the overall semiconductor and AI industry, which would help investors understand where we stand in this AI journey.
For those with an eye on the future, I think SEMI's recent dip might present a buying opportunity. The semiconductor industry is known for its cycles, and downturns often set the stage for strong recoveries. Despite short-term uncertainties, the long-term outlook for semiconductors remains strong as the AI transformation continues.
