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VanEck Semiconductor UCITS ETF (SMH) Holdings and Performance Recap

19 September 2023

Read Time 4 MIN


Review the top contributors and detractors that lead to the SMH ETF’s strong performance in Q2 2023.

SMH Performance overview for Q2 2023

VanEck Semiconductor UCITS ETF has had strong performance in Q2 of 2023, up 14.87% over that time period. Performance was largely due to exposure to NVIDIA Corp. ($NVDA) and their exposure to the growing GPU demand for Artificial Intelligence models. Semiconductors continue to be a primary driver of technological innovation globally, whether its complex systems on a chip or basic memory and components, we believe the sector is a long term trend that investors should consider.

SMH Top Holdings as of 30 June 2023

Ticker Holding Name % of Net Assets
NVDA US Nvidia Corp 10.8
AVGO US Broadcom Inc 10.4
ASML US Asml Holding Nv 9.7
AMD US Advanced Micro Devices Inc 7.7
TXN US Texas Instruments Inc 6.7
INTC US Intel Corp 5.8
QCOM US Qualcomm Inc 5.5
AMAT US Applied Materials Inc 4.6
ADI US Analog Devices Inc 4.0

These are not recommendations to buy or to sell any security. Securities and holdings may vary.

Top two contributors for SMH in Q2 2023

NVIDIA Corp. (NVDA) – 11.9% Average Weight | 5.81% Contribution to return

In the second quarter, Nvidia exceeded expectations, achieving an EPS of $2.70 (surpassing predictions by 62 cents) and recording total sales of $13.51 billion, significantly surpassing anticipated figures. This notable success was driven by robust sales in data centers, which outperformed expert estimates by almost 30%, alongside elevated sales in the Gaming and ProViz sectors.

Their forthcoming quarter forecasts appear promising, with anticipated sales reflecting a 27% increase, augmented profitability per sale, and prudent operational spending. Market analysts responded favorably to these outcomes, revising their forward expectations for Nvidia upwards. Acknowledging Nvidia's adept performance in data centers and enhancing the gaming domain, they highlighted the company's strategic efforts to meet escalating demand by diversifying its product portfolio. However, a degree of caution was expressed due to potential challenges related to chip sales in China and subdued performance in the automotive sector.

Broadcom Inc. (AVGO) – 10.01% Weight | 3.37% Contribution to return

In Q2, Broadcom exceeded expectations with revenue up 3.5% and earnings per share (EPS) beating forecasts by 2.0% or $0.30. Analysts were upbeat about strong Networking growth driven by AI demand, boosting the Semi business before the iPhone refresh. Positive factors include an Apple deal, projected AI revenue increase, and optimism about deal closures. This led to raised estimates and a higher average price target of $847.31.

Top two detractors for SMH in Q2

QUALCOMM Inc. (QCOM) – 5.75% Average Weight | -0.56% Contribution to return

Following Qualcomm's Q3 report, shares fell broadly. The company's revenue of $8.44 billion was 0.8% below expectations, while EPS of $1.87 exceeded predictions by $0.06. Across its segments, QCT's (technology business) revenue was below target but EBT (earnings before taxes) was in line, while QTL (licensing business) missed on both revenue and EBT. The management's Q4 guidance indicates that the midpoint of their revenue and EPS goals is below the previous consensus. Analysts have generally labeled the Q3 results and outlook as disappointing, citing challenges from China, Huawei, and inventory adjustments that had a greater impact than anticipated. Despite this, some analysts find the valuation favorable and remain optimistic about the company's longer-term prospects.

Texas Instruments (TXN) – 6.92% Average Weight | -0.3% Contribution to return

Texas Instruments suffered a relatively bad quarter at -2.5% after a weak earnings forecast. The company communicated that they expect EPS in the range between $1.68 to $1.92 per share in Q3, compared to an analyst prediction of $1.90. The analog chip company faced less orders across all of its business lines, except the automotive industry, with the customers turning to existing stockpiles. The company’s inventory is meanwhile on the rise and the trend is predicted to continue into Q3 and Q4 2023. Revenue in Q2 amounted $4.53 billion, 13% lower than the Q1, but outperformed the average analyst estimate of $4.35 billion. The company posted a $1.87 EPS, down 23.7% YoY.

Standardized Performance

Performance in % (30 June 2023) YTD 1 Year 3 Years* 5 Years* Since Inception* Expense Ratio
VanEck Semiconductor UCITS ETF (NAV) 49 48.47 -- -- 15.29 0.35%
MVSMCTR (Index) 49.17 48.75 25.63 27.43 15.51  

Past performance does not predict future returns.

*Periods greater than one year are annualised.

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