The semiconductor index (SOX) has almost doubled since the recent dip in Oct 2022. With AI advancing and the rise of EVs, is it the right time or too late to invest in SOX?
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The Semiconductor Index (SOX)
The PHLX Semiconductor Sector IndexSM (SOXSM) or (SOX) is a market capitalization-weighted index with companies dealing in the design, manufacturing, distribution, and sale of semiconductors. The SOX started on December 1, 1993, with a 2-1 split on July 24, 1995. The options trading started on September 7, 1994. The starting base value of the semiconductor index was 200.
Today, the price of SOX at the time of writing this article is 4110.20. On Oct 3, it had the lowest recent dip at 2092. Since then, it has almost doubled.
It consists of 30 semiconductor stocks
- Advanced Micro Devices, Inc., AMD
- Analog Devices, Inc., ADI
- Applied Materials, Inc., AMAT
- ASML Holding N.V., ASML
- Azenta, Inc., AZTA
- Broadcom Inc., AVGO
- Coherent Corp., COHR
- Entegris, Inc., ENTG
- GLOBALFOUNDRIES Inc., GFS
- Intel Corporation, INTC
- IPG Photonics Corporation, IPGP
- KLA Corporation, KLAC
- Lam Research Corporation, LRCX
- Lattice Semiconductor Corporation, LSCC
- Marvell Technology, Inc., MRVL
- Microchip Technology Incorporated, MCHP
- Micron Technology, Inc., MU
- Monolithic Power Systems, Inc., MPWR
- Novanta Inc., NOVT
- NVIDIA Corporation, NVDA
- NXP Semiconductors N.V., NXPI
- ON Semiconductor Corporation, ON
- Qorvo, Inc., QRVO
- QUALCOMM Incorporated, QCOM
- Skyworks Solutions, Inc., SWKS
- Synaptics Incorporated, SYNA
- Taiwan Semiconductor Manufacturing Company Limited, TSM
- Teradyne, Inc., TER
- Texas Instruments Incorporated, TXN
- Wolfspeed, Inc., WOLF
These are the top 30 semiconductor-listed stocks in Philadelphia Stock Exchange (PHLX), now known as Nasdaq PHLX.
Why is the semiconductor index becoming popular?
Semiconductors are the engine of modern technology and almost all electronic devices contain semiconductors. Looking at the future, it looks like the application of semiconductors will increase multifold.
From light bulbs and TV remotes to AI and spacecraft, there are billions of components with semiconductors. In the recent intel event about new chips, Chief Executive Officer Pat Gelsinger used the term Siliconomy, highlighting the importance of silicon and semiconductors.
From these perspectives, the Siliconomy industry doesn’t look like a slowing sector.
Why did SOX dip in 2022?
The semiconductor index was on an uptrend, but since the start of 2022, it has started a downward trend due to multiple factors. Some of the reasons are:
- Global recession fear affected the market and consumer consumption sentiment.
- The US Department of Commerce announced strict restrictions on chip export to China.
- Inflation and change of priority for consumers.
Is entering the Semiconductor Index (SOX) in 2024 too late?
Generally, investments in index funds are for long-term investments, and historically, the investments have been on a positive note. It is never too late to enter the market, and there is no perfect time to enter the market. If you are looking for ETF in semiconductors, check out the following alternatives:
- iShares Semiconductor ETF
The ETF contains 30 chip companies, has an annual expense ratio of 0.35%, and manages $7.7 billion in assets.
- VanEck Vectors Semiconductor ETF
The fund owns 25 stocks encompassing semiconductor chip companies from around the globe. It has an annual expense ratio of 0.35% and manages $8.2 billion in assets.
Disclaimer
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Past performance is not indicative of future results. Any investment involves risk, including the potential for loss of principal. Readers should always conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.
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