Semiconductor ETFs may be entering a healthier phase of the chip cycle, as signs of recovery in industrial demand emerge alongside continued strength in artificial intelligence-driven memory. Fresh guidance from Texas Instruments Inc. (NASDAQ:TXN) and record earnings from SK Hynix suggest the rally is no longer dependent on Nvidia Corp (NASDAQ:NVDA) alone.
Broad Semiconductor ETFs See Improving Breadth
Funds such as the VanEck Semiconductor ETF (NASDAQ:SMH) and the iShares Semiconductor ETF (NASDAQ:SOXX) have surged over the past year, largely powered by Nvidia’s dominance in AI accelerators. The funds are up 9% and 12%, respectively.
But Texas Instruments’ latest outlook points to improving demand in analog chips tied to factories, vehicles, and industrial equipment. These areas that had taken a backseat in the AI boom.
For ETF investors, this matters because analog chips reflect demand from factories, vehicles, and everyday industrial activity, not just AI data centers. A rebound here suggests semiconductor ETFs may benefit from broader demand, not just hyperscaler spending.
AI Memory Strength Keeps Nvidia-Centric Trade Alive
While industrial chips show signs of life, the AI side of the semiconductor trade remains firmly intact. SK Hynix, the world’s leading supplier of high-bandwidth memory used in Nvidia’s AI accelerators, posted its strongest quarterly results on record. Operating profit more than doubled in the December quarter, comfortably beating analyst expectations.
The company’s dominance in HBM3E, now essential for advanced AI workloads, has helped its shares roughly triple since September. SK Hynix also announced plans to cancel about $8.6 billion worth of treasury shares, reinforcing confidence in the durability of AI-driven demand.
This continued momentum supports ETFs with heavy AI exposure, including SMH and SOXX, where Nvidia remains a top holding.
Asia And Memory Exposure Add Another ETF Tailwind
The Takeaway For ETF Investors
The semiconductor rally is no longer a one-note Nvidia story. With AI memory demand still surging and analog chips showing early signs of recovery, semiconductor ETFs appear to be shifting into a more balanced phase of the cycle that could support broader, more sustainable gains.
Image: Shutterstock