The semiconductor industry remains a critical pillar of technological innovation, powering everything from AI to high-performance computing. While Nvidia (NVDA) dominates headlines, we aim to highlight lesser-known names that are making significant contributions to the semiconductor space. Investors looking for exposure to this sector can consider two key semiconductor ETFs: VanEck Semiconductor ETF (SMH) and VanEck Fabless Semiconductor ETF (SMHX). Below, we explore SMH's top holdings (excluding Nvidia) and highlight three unique holdings in SMHX to watch in 2026.
Why Chips Are a Critical Sector for Investors in 2026
- AI & Cloud Computing: Demand for advanced semiconductors continues growing as AI workloads expand across industries, with generative AI and large-scale inference driving a new wave of chip investment.
- Geopolitical & Supply Chain Shifts: U.S.-China trade tensions and government incentives (e.g., CHIPS Act) continue to influence semiconductor production strategies, with domestic fab buildouts gaining momentum.
- Memory & Data Center Surge: AI model training and inference have significantly grown, fueling demand for high-bandwidth memory (HBM) and data center chips. This has lifted companies like Micron to the top five status in SMH.
- ASIC Growth: Application-Specific Integrated Circuits (ASICs) are becoming increasingly important in AI, crypto mining, and high-speed networking, driving innovation across the sector.
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