Semiconductor ETFs Offer Gateway to Taiwan-US Chip Partnership Gains

The finalization of a landmark trade agreement between the United States and Taiwan on January 15, 2026, represents a watershed moment for the semiconductor industry. The deal, valued at $500 billion, mandates that Taiwanese chip manufacturers invest at least $250 billion into U.S. fabrication capacity, while Taiwan’s government pledges $250 billion in credit support for supply chain companies relocating stateside. In return, the U.S. commits to substantial tariff concessions, capping rates at 15% (down from the reciprocal 20% imposed last August) and eliminating duties on pharmaceuticals, aircraft components, and specific raw materials. This reshaping of global chip manufacturing infrastructure presents a compelling investment narrative—one that semiconductor ETFs are uniquely positioned to capture.

The agreement targets a critical vulnerability in Western technology supply chains: semiconductor manufacturing concentration in a single region. By incentivizing nearshoring of chip production and equipment supply to American soil, policymakers aim to reduce geopolitical risk while sustaining U.S. technological competitiveness. For portfolio managers seeking exposure to this structural shift, semiconductor ETFs deliver instant diversification across the entire value chain—from foundries and equipment suppliers to design leaders—without betting on any single company’s execution.

The Supply Chain Transformation: Winners Across Multiple Tiers

The Taiwan-US partnership creates measurable advantages across the semiconductor ecosystem. Taiwan Semiconductor Manufacturing Company (TSMC) emerges as the primary beneficiary, with reports confirming land acquisitions in Arizona and plans to potentially expand its U.S. footprint to six advanced manufacturing facilities. The company has already deployed $40 billion into Arizona operations under the CHIPS Act, with a commitment to invest $100 billion across U.S. plants. The new tariff relief removes a critical economic headwind—potential duties as high as 100%—making U.S. expansion substantially more attractive.

Beyond TSMC, the agreement unlocks demand across interconnected sectors. Equipment manufacturers like Applied Materials, ASML Holding, Lam Research, and KLA Corporation face years of sustained tooling orders as new fabrication plants come online. Meanwhile, U.S. chip designers—including Nvidia, Broadcom, and Advanced Micro Devices—stand to reduce supply chain latency and lower sourcing costs by maintaining closer relationships with nearby fabs. Micron Technology, America’s homegrown memory chip producer, benefits from dual tailwinds: its existing New York and Idaho facilities align with reshoring objectives, while a stronger domestic manufacturing base elevates demand for memory components.

Why Semiconductor ETFs Outpace Individual Stock Strategies

The appeal of investing through semiconductor ETFs rather than picking individual winners stems from the sector’s inherent dynamics. A single company misstep—a delayed fab ramp, a missed technology node, or demand softness for a specific product category—can inflict severe losses despite favorable industry conditions. Semiconductor ETFs mitigate this idiosyncratic risk by maintaining exposure to dozens of companies across design, fabrication, and equipment supply. The result: investors capture the sector’s structural growth without being hostage to company-specific execution risk.

Three primary semiconductor ETFs warrant consideration for exposure to the chip alliance upside:

Leading Semiconductor ETF Options

VanEck Semiconductor ETF (SMH) holds $42.49 billion in assets and tracks 26 semiconductor stocks. Its portfolio emphasizes design leaders, with Nvidia representing 19.17% of holdings, TSMC at 10.45%, and Broadcom at 7.68%. Over the trailing twelve months, SMH delivered a 57.1% return. The fund’s 35 basis point expense ratio is competitive, and its trading volume of 9.94 million shares daily ensures efficient entry and exit. Zacks analysts assigned it a Strong Buy rating.

iShares Semiconductor ETF (SOXX) manages $20.28 billion across 30 U.S.-listed semiconductor companies. Its diversification spans manufacturers, designers, and distributors, with Micron (7.39%), Nvidia (7.36%), and AMD (7.31%) as top three positions. SOXX posted a 51.9% annual gain, fractionally trailing SMH. At 34 basis points, the expense ratio closely mirrors competitors. The fund’s 6.52 million share daily volume provides solid liquidity. This fund also carries a Strong Buy designation from Zacks.

Invesco PHLX Semiconductor ETF (SOXQ) operates a narrower mandate with $921.5 million in assets tracking 31 large-cap U.S. semiconductor companies. Nvidia dominates the portfolio at 11.29%, followed by Broadcom (7.67%) and AMD (7.48%). SOXQ’s 52.7% trailing return sits between its larger peers, while the 19 basis point fee represents the lowest cost option. Daily trading volume of 590,000 shares reflects a smaller investor base, potentially affecting entry timing for larger positions.

Capitalizing on Structural Tailwinds

The Taiwan-US chip alliance catalyzes multiple favorable trends: reshoring of manufacturing capacity, elevated demand for fabrication equipment, enhanced supply chain resilience, and sustained investment cycles in advanced node production. Rather than speculating on which individual companies best navigate these currents, semiconductor ETFs provide a systematic mechanism to participate in the entire sector’s upside. For investors evaluating entry points into chip-related exposure, the current environment—marked by this policy-driven reorientation—presents a compelling window to build positions through diversified semiconductor ETF vehicles.