Best Semiconductor ETFs to Watch as US-Taiwan Chip Partnership Reshapes the Industry

The landscape for semiconductor investments just shifted dramatically. On January 15, 2026, the United States and Taiwan announced a groundbreaking partnership: a $500 billion joint initiative to build advanced chip manufacturing capacity on American soil. For investors seeking exposure to this historic reshoring movement, the best semiconductor ETFs offer a diversified way to capture the gains without betting on individual company execution.

This massive industrial policy collaboration—with Taiwanese companies committing $250 billion in direct investment and Taiwan’s government guaranteeing another $250 billion in credit lines—signals a fundamental reshuffling of global chip production. The payoff for shareholders? A clear tailwind from tariff certainty (rates capped at 15%, down from 20%), booming fab construction activity, and a strengthened domestic supply chain. Here’s what investors need to know about the best semiconductor ETFs positioned to benefit.

Understanding the Chip Deal’s Direct Investment Impact

The agreement represents far more than just a trade negotiation—it’s a comprehensive industrial restructuring. The U.S. gains manufacturing sovereignty; Taiwan secures tariff relief and long-term market certainty. But for investors, the real story lies in which companies will execute the $250 billion buildout.

The primary beneficiary is clearly Taiwan Semiconductor Manufacturing Company (TSM), which has already purchased hundreds of acres across Arizona to potentially establish six or more production megafabs. With $40 billion already invested in Arizona facilities through CHIPS Act support and a commitment to spend $100 billion across U.S. plants, TSM now has concrete incentives to accelerate expansion without facing potential tariffs that could have reached 100%.

But TSM is just the anchor tenant in a much larger ecosystem. The deal creates a cascading benefit structure:

Equipment Suppliers: Companies like Applied Materials (AMAT), ASML Holding (ASML), Lam Research (LRCX), and KLA Corporation (KLAC) will see sustained demand as new fabrication facilities come online and require specialized tooling and process control equipment.

Chip Design Leaders: Nvidia (NVDA), Broadcom (AVGO), and Advanced Micro Devices (AMD) rely heavily on TSMC for advanced chip production. Proximity to a secure, tariff-advantaged supplier reduces costs and supply chain risks—a meaningful tailwind for their margins.

Memory Chip Producers: Micron Technology (MU) operates existing high-volume fabs in New York and Idaho. The expansion of U.S. manufacturing capacity will increase demand for critical memory components, positioning Micron to benefit from the reshoring wave.

Why Diversified Semiconductor ETFs Beat Individual Stocks

Investing in TSM or NVDA directly offers exposure to the deal’s benefits, but it concentrates risk. Semiconductor companies face execution challenges: delayed fab construction, missed technology nodes, softening demand for specific product lines. A single operational misstep can crater a stock price, even within a favorable industry macro environment.

The solution is the best semiconductor ETF approach: gain exposure to the entire ecosystem—chipmakers, equipment suppliers, design firms, and memory producers—in a single, diversified vehicle. This removes company-specific risk while maintaining pure focus on the industry’s powerful tailwinds: reshoring, artificial intelligence demand, and automotive electrification.

The Best Semiconductor ETFs for 2026

VanEck Semiconductor ETF (SMH) Net assets: $42.49 billion | Holdings: 26 companies Fee: 35 basis points | Year return: 57.1%

SMH is the largest semiconductor ETF by assets. Its portfolio balances chipmakers with equipment suppliers. Top holdings include NVDA (19.17%), TSM (10.45%), and AVGO (7.68%), giving it significant exposure to both the deal’s direct beneficiaries and the broader ecosystem. With 9.94 million shares trading daily, SMH offers exceptional liquidity. The fund carries a Zacks ETF Rank of #1 (Strong Buy).

iShares Semiconductor ETF (SOXX) Net assets: $20.28 billion | Holdings: 30 companies Fee: 34 basis points | Year return: 51.9%

SOXX offers broader U.S. semiconductor exposure with a focus on domestic companies. Its portfolio includes MU (7.39%), NVDA (7.36%), and AMD (7.31%), providing more balanced sector coverage than cap-weighted alternatives. At 6.52 million daily shares, SOXX maintains solid trading volume. This fund also carries a Zacks ETF Rank of #1.

Invesco PHLX Semiconductor ETF (SOXQ) Net assets: $921.5 million | Holdings: 31 companies Fee: 19 basis points | Year return: 52.7%

SOXQ is the most cost-efficient option, charging just 19 basis points—16 points cheaper than SMH and 15 points cheaper than SOXX. This matters for long-term investors. The portfolio holds NVDA (11.29%), AVGO (7.67%), and AMD (7.48%). Despite smaller assets under management, SOXQ still trades 0.59 million shares daily. Like the others, it holds a Zacks ETF Rank of #1.

Selecting Your Best Semiconductor ETF: A Practical Framework

Choose SMH if you want: The largest, most liquid option with the strongest brand recognition and institutional backing.

Choose SOXX if you prefer: Broader diversification across 30 U.S. companies with lower concentration risk than SMH’s 26 holdings.

Choose SOXQ if cost matters most: The lowest fee structure combined with comparable semiconductor exposure to higher-cost alternatives.

All three funds will benefit from the US-Taiwan chip partnership, but your choice depends on your risk tolerance, time horizon, and cost sensitivity. The best semiconductor ETF for your portfolio is ultimately the one you’ll hold through the inevitable volatility that comes with semiconductor sector participation.

The $500 billion reshoring wave is just beginning. Whether you choose SMH, SOXX, or SOXQ, semiconductor ETFs offer a practical way to participate in one of the decade’s most significant industrial transitions.