Also Read: Why this fund manager sold semiconductor ETFs just before the Friday carnage
The decline marked a sharp reversal after a strong run. Before the recent sell-off, the ETF had gained more than 75% over the previous year.
SMH tracks the MVIS US Listed Semiconductor 25 Index, which comprises the 25 largest US-listed semiconductor companies. The ETF holds 26 stocks, manages about $67.7 billion in assets and charges an expense ratio of 0.35%.
Nvidia is the fund’s largest holding with a 21.7% weight, followed by TSMC at 9.5% and Broadcom at 6.73%. Texas Instruments, Micron Technology, ASML Holding and AMD are also among its top holdings.
What triggered the sell-off
The immediate trigger was Broadcom’s cautious outlook for AI chip demand, which reignited concerns that spending on AI infrastructure could slow. The pressure intensified as memory chip prices weakened, reports suggested China was narrowing the technology gap in semiconductor manufacturing, and forecasts pointed to softer global smartphone demand, weighing on chipmakers exposed to consumer electronics.
Also Read: What are leveraged ETFs and how are they driving the AI rally?A concentrated bet on AI bellwethers
SMH’s concentrated portfolio makes it particularly sensitive to swings in sentiment around AI-related stocks.
With Nvidia accounting for more than one-fifth of the ETF, its performance is heavily influenced by a handful of dominant chipmakers rather than the broader semiconductor industry.Also Read: Wall Street races to launch ETFs tied to SK Hynix after Nasdaq debut
