Global X Semiconductor ETF
Invest in the world’s leading microchip makers and designers.
The Global X Semiconductor ETF (ASX: SEMI) seeks to invest in companies that stand to potentially benefit from the broader adoption of tech-enabled devices that require semiconductors.
SEMI invests in the largest and most influential semiconductor companies in the world. The companies it holds are responsible for most of global microchip production. SEMI tracks the Solactive Global Semiconductor 30 Index, which contains 30 companies in developed markets, Korea and Taiwan from across the semiconductor value chain.
- In 2022, nearly US$574 billion microchips were bought 2.
- Semiconductor components like transistors are now so small that the machines making them must be accurate on the atomic level.
Semiconductors, also known as microchips, are the ‘brains’ behind electronic devices. They control and manipulate the flow of electricity and are what make modern computing possible. They are in virtually every electronic device: microwaves, rice cookers, iPhones, computers. Semiconductors are built on thin wafers of silicon (sand) and made from millions–or billions–of tiny components called transistors. Semiconductors have gotten much smaller over the years, in a process called “Moore’s Law”. As they have shrunk, computers have become more powerful.
The semiconductor industry is made up of large companies that are specialised in certain areas. These specialisations can be filled with jargon. Some specialisations include:
- Foundries: are the specialist factories where microchips are made. Within these, there are “cleanrooms” with extremely pure air to stop microchips from getting contaminated by dust.
- Transistors: are the tiny gateways that control the flows of electricity on a microchip. There are millions or billions of them on modern microchips.
- Lithography: is where design patterns get printed onto microchips. This is done using extremely powerful ultraviolet light.
- GPUs: graphics processing units are powerful microchips that can do many tasks at the same time. They started out powering video games but have become the foundation of artificial intelligence.
- CPUs: central processing units are the main engine on computers. They can perform a broad array of different tasks, quite like a Swiss Army Knife.
- SEMI tracks the Solactive Global Semiconductor 30 Index.
- The index is made of 30 semiconductor businesses in developed markets, plus Korea and Taiwan.
- Semiconductor companies are those defined as such by FactSet’s Revere Business Industry Classification System (RBICS).
- To qualify for index inclusion, companies must have a market capitalisation of US$1 billion and a minimum average daily trading value of US$1 million over 1 month.
- The top 30 companies by market capitalisation are picked, with the weights of each stock capped at 10%.
- To express long-term strategic or short-term tactical views on the growing demand for microchips.
- To complement technology sector exposure with tech-aligned companies outside of the GICS classification (the industry sector classification created by MSCI and S&P Dow Jones Indices).
- To aid portfolio diversification via investment in industries that are largely absent from the Australian market.
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The issuer of units in Global X Semiconductor ETF (SEMI) ARSN: 651 639 315 is the responsible entity of the Fund, being Global X Management (AUS) Limited (AFSL 466778) ("Global X"). The product disclosure statement (PDS) for the Fund contains all of the details of the offer of units in the Fund. Copies of the PDS are available from Global X Management (AUS) Limited or at www.globalxetfs.com.au. In respect of each retail product, Global X has prepared a target market determination (TMD) which describes the type of customers who the relevant retail product is likely to be appropriate for. The TMD also specifies distribution conditions and restrictions that will help ensure the relevant product is likely to reach customers in the target market. Each TMD is available at www.globalxetfs.com.au. The information provided in this document is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information in this document, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant PDS and TMD. Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Global X, the group of companies which Mirae Asset Global Investments Co., Ltd is the parent, or their respective directors, employees or agents guarantees the performance of any products issued by Global X or the repayment of capital or any particular rate of return therefrom. The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance. The financial instrument is not sponsored, promoted, sold or supported in any other manner by Solactive AG, nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Solactive Global Semiconductor 30 Index (the “Index”) and/or Index trade mark or the Index price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Sponsor, Solactive AG has no obligation to point out errors in the Index to third parties including, but not limited to, investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG, nor the licensing of the Index or Index trade mark for the purpose of use in connection with the financial instrument, constitutes a recommendation by Solactive AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this financial instrument.
Information current as at 29 February 2024
Global X ETFs is a leading global ETF provider with a growing range of cost-effective and innovation-led products which are built to help investors and their advisers achieve better investment outcomes. While we are distinguished for our Thematic Growth, Income, and International Access ETFs, we also offer Core, Commodity, and Digital Assets funds to suit a wide range of investment objectives. Explore our ETFs, research, and insights, and more at www.globalxetfs.com.au.
Global X is a member of Mirae Asset Financial Group, a global leader in financial services, with more than US$528 billion in assets under management worldwide.¹ Mirae Asset has an extensive global ETF platform ranging across the US, Australia, Brazil, Canada, Colombia, Europe, Hong Kong, India, Japan, Korea, and Vietnam with almost $100 billion in assets under management.²
¹ Assets under management as at March 2023, Mirae Asset Global Investments
² Assets under management as at June 2023, Mirae Asset Global Investments
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Semiconductors, or microchips, are like the brains behind electronic devices. They are in virtually every electronic device in existence: televisions, laptops, phones, microwaves, cars, rice cookers – and the rest. They are so ubiquitous that we usually forget they are there. Semiconductors manipulate the flow of electricity to produce binary computer code. This in turn allows machines and computers to function. The semiconductor industry is a complex and capital-intensive industry with a truly globalised supply chain. It is made up of very large companies that monopolise or oligopolise certain specialised areas. These specialties include foundries, which are companies like Samsung and TSMC that make the microchips. Chip designers, (or “fabless”) like Nvidia and AMD, which create the microchip architecture. And equipment makers, like Lam Research and ASML, that produce the machines that build microchips.
Companies from developed markets, Korea and Taiwan are taken from the FactSet classification system, known as Revere Business Industry Classification System (RBICS). Companies in the semiconductor RBICS industry and its semiconductor equipment and services and semiconductor manufacturing subsectors are eligible for inclusion. To qualify for the index, companies must have a market capitalisation of US$1 billion and a minimum average daily trading value of US$1 million over 3 months (these requirements are lowered for existing constituents at rebalance.) The top 30 companies by market capitalisation are picked, with the weights of each stock capped at 10%.
SEMI uses a capped index methodology, where the largest companies are restricted to taking no more than 10% of the portfolio. At each quarterly rebalance, the biggest companies in the index are sold back down to 10% if their weights have ballooned beyond the set 10% parameter. This weighting methodology is used to prevent the biggest companies – as of July 2021, these are TSMC and Nvidia – from becoming too influential in determining the performance of the fund.
The semiconductor supply chain is truly global, ranging from the US to Europe and Asia. By using SEMI, investors can access this global supply chain in a single trade. This spares them the work and cost of buying a portfolio of global semiconductor stocks individually. It also provides instant diversification and potentially lower risk than buying individual stocks. As SEMI trades on the ASX and is locally domiciled, there is also less paperwork for end investors. Investors will not be required to complete W-8 BEN forms.
To express long-term strategic or short-term tactical views on the growing demand for microchips. To complement technology sector exposure with tech-aligned companies outside of the GICS classification (the industry sector classification created by MSCI and S&P Dow Jones Indices). To aid portfolio diversification via investment in industries that are largely absent from the Australian market.
We design our ETFs with a view of minimising the amount of overlap between each. In this way, investors who buy more than one of our funds avoid buying the same stocks repeatedly. The precise amount of overlap between each fund can differ as the stocks moving in and out of each ETF change at index rebalance/reconstitution. Whatever overlap exists is usually small. For investors wanting to know the exact quantify of overlap between specific ETFs, please feel free to contact us.
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