The Semiconductor ETF Has Lost a Quarter of Its Value Since June. Buy It Now and Hold It Through 2030.

The VanEck Semiconductor ETF (SMH) has lost around 25% of its value since its June 22 record close of $668.91, currently trading near $502. The decline started with an 11% drop on November 5, the fund's worst day since 2020, driven by worries about slower AI data center spending following midterm elections. Qualcomm, a constituent of the fund, also reported disappointing earnings that day.

Despite this, the fund is up roughly 39% in 2026, from $360.13 at the end of 2025. I believe this decline makes it a good purchase for investors willing to hold through 2030.

When looking at the data, the fund's stocks traded at around 28 times earnings as of October 31, down from 49 times earnings a week later in June. This price-to-earnings ratio decrease largely comes from companies within the fund reporting higher earnings, not falling stock prices. The Semiconductor Industry Association (SIA) reported global chip sales rose 24.1% in the July-September quarter, with second-quarter sales up 35.1% over the second quarter.

Sales have continued to climb, with first-quarter sales increasing more than 20% quarter-to-quarter for three consecutive quarters.

However, this growth may not last forever, as the fund's price-to-earnings ratio is based on earnings that may be near a peak. If chip prices drop as supply catches up, these earnings might fall, making the fund appear expensive at a lower price. While a buy-and-hold investor doesn't need current growth rates to continue, the fund's biggest risk is its concentration.

Nvidia and Taiwan Semiconductor Manufacturing make up over a quarter of the fund, with the top 10 holdings accounting for about 69%. Despite this, the fund offers diversification through other holdings like Broadcom and Texas Instruments. With a 0.35% expense ratio, the fund seems priced reasonably for a group of rapidly growing businesses.