Top Semiconductor Companies to Watch in 2025
February 12, 2025
Read Time 5 MIN
The semiconductor industry remains a critical pillar of technological innovation, powering everything from AI to high-performance computing. While Nvidia 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 2025.
Why Chips Are a Critical Sector for Investors in 2025
- AI & Cloud Computing: Demand for advanced semiconductors will continue growing as AI workloads expand across industries.
- Geopolitical & Supply Chain Shifts: U.S.-China trade tensions and government incentives (e.g., CHIPS Act) are influencing semiconductor production strategies.
- Market Demand & Innovation: With increased reliance on data centers, autonomous vehicles, and high-performance computing, leading semiconductor firms are poised for strong revenue growth.
- ASIC Growth: Application-Specific Integrated Circuits (ASICs) are becoming increasingly important in AI, crypto mining, and high-speed networking, driving innovation across the sector.
Top 5 Semiconductor Companies to Watch in SMH This Year*
- Taiwan Semiconductor Manufacturing Co. (TSMC) – 12.73%
- What They Do: The world's largest contract chip manufacturer, producing semiconductors for major companies like Apple and AMD.
- Outlook for 2025: With AI and high-performance computing demand soaring, TSMC is well-positioned to benefit from increased chip complexity and production volume. TSMC's leadership in advanced process nodes and continued investment in cutting-edge manufacturing technologies will solidify its competitive edge amid rising global semiconductor demand.
- Broadcom Inc. – 9.93%
- What They Do: Designs and develops semiconductor solutions, including chips for networking, broadband, and wireless communications.
- Outlook for 2025: Broadcom is expected to benefit from AI-driven networking demand and its diversified revenue across infrastructure and software. Its leadership in custom ASICs, network switching, and silicon photonics further positions the company for expansion, especially in data center and AI-related infrastructure deployments.
- Qualcomm Inc. – 4.74%
- What They Do: Develops wireless technologies, including mobile processors, 5G chips, and automotive solutions.
- Outlook for 2025: With strong positioning in 5G and edge AI, Qualcomm should sustain growth as mobile and IoT applications expand. Moreover, Qualcomm's advancements in AI-driven on-device processing and automotive semiconductors position it well for next-generation smart devices, autonomous vehicles, and industrial automation applications.
- Advanced Micro Devices (AMD) – 4.17%
- What They Do: Compete with Intel in CPUs and GPUs, with a growing presence in AI and data center chips.
- Outlook for 2025: AMD's focus on AI accelerators and high-performance computing should drive continued growth. The company's EPYC server processors continue to gain traction in cloud and enterprise markets, while its investments in AI and adaptive computing through acquisitions like Xilinx enhance its ability to meet the evolving needs of AI workloads.
- Texas Instruments (TXN) – 4.16%
- What They Do: Designs and manufactures analog and embedded processing chips, serving industries from automotive to industrial automation.
- Outlook for 2025: Strong demand in industrial and automotive applications should sustain steady revenue growth. Texas Instruments' strategic focus on in-house manufacturing and expanding its 300mm wafer production capabilities will enable cost efficiencies and supply chain resilience, ensuring it remains a key player in the analog semiconductor market.
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Top Unique Holdings in SMHX (Not in SMH)
- Arm Holdings Plc (5.00%)
- What They Do: Designs energy-efficient microprocessors used in smartphones, data centers, and AI applications.
- Outlook for 2025: With increasing AI workloads and a growing need for power-efficient chips, Arm is expected to benefit from rising demand in mobile, cloud, and edge computing.
- ASIC Focus: Arm's custom chip architectures play a significant role in AI and IoT-driven ASIC development.
- Astera Labs Inc (3.75%)
- What They Do: Develop connectivity solutions for cloud computing and AI workloads, focusing on reducing bottlenecks in data-intensive applications.
- Outlook for 2025: As AI and cloud computing demand grow, Astera Labs is well-positioned to support the industry's transition to high-speed connectivity and low-latency systems.
- Rambus Inc (3.74%)
- What They Do: Specialize in memory and security chip solutions, playing a crucial role in high-performance computing.
- Outlook for 2025: The push for AI-driven workloads and increasing cybersecurity concerns will likely drive demand for Rambus' memory and cryptographic solutions.
- ASIC Focus: Rambus' cryptographic security ASICs are increasingly vital in securing AI-driven and financial applications.
Accessing the Opportunities in The Semi Space
Investing in semiconductors requires an understanding of the market's cyclical nature and key industry drivers. Whether you're looking for broad exposure or a more targeted approach, ETFs can offer an efficient way to access the sector.
Key Takeaways for Accessing the Semiconductor Space:
- Diversification Matters: Investing in individual semiconductor stocks can be volatile. ETFs like VanEck Semiconductor ETF (SMH) and VanEck Fabless Semiconductor ETF (SMHX) provide diversified exposure to leading companies in the industry.
- AI, Data Centers, and Connectivity: As AI workloads, cloud computing, and 5G expansion accelerate, semiconductor demand will remain strong. Investors should consider exposure to companies driving these innovations.
- Understanding Fabless vs. Foundry: SMH provides exposure to both chip designers and manufacturers, while SMHX focuses exclusively on fabless semiconductor companies, which design chips but outsource manufacturing, offering a different risk/reward profile.
- Long-Term Growth Potential: With government support through initiatives like the CHIPS Act and increasing global semiconductor reliance, this sector remains a crucial long-term investment opportunity.
How to Invest in Semiconductors
For investors seeking broad exposure to the semiconductor industry, VanEck Semiconductor ETF (SMH) provides a diversified portfolio that includes both semiconductor designers and manufacturers, making it an attractive option for those looking to capture the industry's growth potential. Meanwhile, VanEck Fabless Semiconductor ETF (SMHX) focuses exclusively on fabless semiconductor companies, which benefit from high-margin chip design and innovation while avoiding the capital-intensive nature of manufacturing. By investing in these funds, investors can gain access to the evolving semiconductor landscape and capitalize on advancements in AI, IoT, and high-performance computing.
Both funds allow investors to participate in the semiconductor growth story while spreading risk across multiple companies. As AI, IoT, and high-performance computing drive semiconductor demand, these ETFs provide structured exposure to one of the market's most innovative industries.
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Disclosures
* Holdings as of 02/10/2025.
Holdings will vary for the VanEck Semiconductor ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here: SMH - VanEck Semiconductor ETF - Holdings.
Holdings will vary for the VanEck Fabless Semiconductor ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here: SMHX - VanEck Fabless Semiconductor ETF - Holdings.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Prior to using any AI tools, please consult your compliance and legal departments to assess and mitigate potential risks associated with its application in your specific regulatory environment.
Please note that any content generated by an Artificial Intelligence (AI) system has not been subject to a human review, and thus no assurance can be made as to its accuracy. Please exercise caution when using AI systems and verify the content produced through such systems wherever possible.
MVIS® US Listed Semiconductor 25 Index (MVSMHTR): seeks to track the overall performance of companies involved in semiconductor production and equipment. Market Vector US Listed Fabless Semiconductor Index: tracking the performance of US-listed companies that specialize in the semiconductor industry and operate as fabless semiconductor companies.
An investment in the VanEck Semiconductor ETF (SMH) and VanEck Fabless Semiconductor ETF (SMHX) may be subject to risks which include, among others, risks related to investing in the semiconductor industry, special risk considerations of investing in Taiwanese issuers, equity securities, small-, medium and large-capitalization companies, foreign securities, emerging market issuers, foreign currency, depositary receipts, issuer-specific changes, market, operational, index tracking, authorized participant concentration, new fund, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified, and index-related concentration risks, all of which may adversely affect the Fund. Small, medium and large-capitalization companies may be subject to elevated risks. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com/etfs. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
Related Funds
Disclosures
* Holdings as of 02/10/2025.
Holdings will vary for the VanEck Semiconductor ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here: SMH - VanEck Semiconductor ETF - Holdings.
Holdings will vary for the VanEck Fabless Semiconductor ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here: SMHX - VanEck Fabless Semiconductor ETF - Holdings.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Prior to using any AI tools, please consult your compliance and legal departments to assess and mitigate potential risks associated with its application in your specific regulatory environment.
Please note that any content generated by an Artificial Intelligence (AI) system has not been subject to a human review, and thus no assurance can be made as to its accuracy. Please exercise caution when using AI systems and verify the content produced through such systems wherever possible.
MVIS® US Listed Semiconductor 25 Index (MVSMHTR): seeks to track the overall performance of companies involved in semiconductor production and equipment. Market Vector US Listed Fabless Semiconductor Index: tracking the performance of US-listed companies that specialize in the semiconductor industry and operate as fabless semiconductor companies.
An investment in the VanEck Semiconductor ETF (SMH) and VanEck Fabless Semiconductor ETF (SMHX) may be subject to risks which include, among others, risks related to investing in the semiconductor industry, special risk considerations of investing in Taiwanese issuers, equity securities, small-, medium and large-capitalization companies, foreign securities, emerging market issuers, foreign currency, depositary receipts, issuer-specific changes, market, operational, index tracking, authorized participant concentration, new fund, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified, and index-related concentration risks, all of which may adversely affect the Fund. Small, medium and large-capitalization companies may be subject to elevated risks. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com/etfs. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.