KEY POINTS
- The VanEck Semiconductor ETF (SMH) has swelled to $52.91 billion in total net assets with a 28.9% year-to-date return, driven by a week of blockbuster earnings from TSMC and ASML that confirmed the AI spending cycle is accelerating.
- TSMC reported Q1 revenue up 41% to $35.9 billion and earnings up 65%, while ASML raised its 2026 revenue guidance to €36–40 billion on sustained AI infrastructure investment.
- Watch the tech sector's reaction to Apple's CEO transition and continued geopolitical risk; SMH's $300 level has served as support, and a push through $330 would mark new all-time highs.
The VanEck Semiconductor ETF reached $52.91 billion in total net assets as of April 17, a figure that would have seemed absurd two years ago and now merely reflects the extraordinary capital flowing into the companies building the physical infrastructure of the AI era. SMH has returned 28.9% year-to-date and more than 120% over the past 12 months, making it one of the best-performing thematic ETFs in any category.
The asset surge is not just price appreciation. Investors have been actively adding to semiconductor ETF positions throughout April, with ETF.com flagging elevated demand for SMH alongside Japan-focused funds as a standout flow trend. The technology sector led all 11 S&P 500 sectors in weekly ETF inflows for the period ending April 10, and semiconductor exposure captured a disproportionate share of that allocation.
TSMC and ASML Validated the Thesis
Last week's earnings season provided the fundamental confirmation that chip ETF bulls needed. TSMC reported first-quarter revenue of $35.9 billion, up 41% year-over-year, with earnings per share of $3.49 representing a 65% jump from the prior year. The company's CEO described AI-related demand as "extremely robust" and forecast full-year 2026 revenue growth exceeding 30% in dollar terms.
ASML delivered its own beat, posting Q1 net sales of €8.8 billion and raising full-year guidance to €36–40 billion. The Dutch lithography monopoly's outlook directly reflects the capital expenditure commitments of TSMC, Samsung, and Intel — the foundries that buy ASML's extreme ultraviolet machines are spending record amounts because their hyperscaler customers are spending record amounts on AI.
The earnings trajectory creates a self-reinforcing cycle for semiconductor ETFs. Rising revenues drive stock price appreciation, which inflates ETF NAV, which attracts more inflow-driven buying, which pushes prices higher. SMH's top holdings — Nvidia, TSMC, Broadcom, ASML, and AMD — are all direct beneficiaries of AI spending, and their combined weight in the fund means that every dollar of AI capex translates into ETF performance.
The Google-Marvell Wrinkle
Monday's report that Alphabet is in discussions with Marvell Technology to co-develop AI processors adds a new dynamic to the semiconductor ETF landscape. Marvell, which is a smaller holding in SMH, surged 6.3% premarket on the news while Broadcom declined. The Google deal illustrates how the AI chip ecosystem is expanding beyond the Nvidia-centric narrative that dominated 2023 and 2024.
For ETF investors, the broadening of the AI chip supply chain is net positive. It means that semiconductor ETFs benefit from AI spending regardless of which specific chipmaker wins a particular contract. Whether Google builds its next TPU with Broadcom, Marvell, or both, the capital flows through TSMC's foundries and ASML's lithography tools — companies that sit at the top of SMH's holdings.
The broader ETF flow picture reinforces the semiconductor rotation. The SPDR S&P 500 Trust pulled in $12.38 billion for the week ending April 10, and QQQ attracted $5.39 billion in monthly net flows, suggesting that equity investors broadly are leaning into U.S. large-cap and tech exposure. Within that allocation, semiconductor ETFs are capturing an outsized share as the most direct play on AI infrastructure spending.
Risks on the Radar
The geopolitical backdrop introduces risk that pure fundamentals cannot offset. TSMC manufactures the vast majority of the world's advanced chips in Taiwan, a geography that carries its own set of geopolitical concerns. The U.S.-Iran tensions that rattled markets Monday are not directly related to chip supply chains, but any broadening of Middle East conflict could disrupt global shipping routes and energy costs in ways that slow the economy and reduce corporate spending — including AI capex.
Apple's CEO transition also warrants attention. Apple is a significant Broadcom customer for wireless and connectivity chips, and any shift in Apple's silicon strategy under John Ternus could affect order volumes for multiple SMH constituents. The $300 level on SMH has served as strong support through April's volatility. A sustained push above $330 — roughly 5% above current levels — would mark new all-time highs and likely trigger additional momentum-driven inflows. The next earnings catalyst comes from TSMC's April revenue data, expected in early May, which will reveal whether the Q1 demand surge carried into the second quarter.
