When people say they follow "the chip sector", they often mean a semiconductor ETF. SMH, the VanEck Semiconductor ETF, is one of the best known. An ETF is only as interesting as its rulebook, though: which companies get in, and how much of each. Here's what SMH held this week and the index rules that decide it, taken directly from VanEck's fund page and MarketVector's index guide.
The short version
SMH "seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS US Listed Semiconductor 25 Index", in VanEck's words. That index tracks "the largest and most liquid US-listed companies in the semiconductor industry". The fund launched on Dec 20, 2011.
So to understand SMH, read the index rules.
What it held on Oct 21, 2026
From VanEck's daily holdings (percent of net assets):
| # | Company | Ticker | Weight |
|---|---|---|---|
| 1 | Nvidia | NVDA | 20.56% |
| 2 | Taiwan Semiconductor Manufacturing | TSM | 9.56% |
| 3 | Advanced Micro Devices | AMD | 5.49% |
| 4 | Broadcom | AVGO | 5.46% |
| 5 | Texas Instruments | TXN | 5.06% |
| 6 | Micron Technology | MU | 4.61% |
| 7 | Analog Devices | ADI | 4.53% |
| 8 | Marvell Technology | MRVL | 4.52% |
| 9 | ASML Holding | ASML | 4.52% |
| 10 | KLA | KLAC | 4.16% |
The other 15: Intel 4.07%, Applied Materials 4.06%, Qualcomm 3.93%, Lam Research 3.84%, SK Hynix 3.74%, Cadence 2.07%, Synopsys 2.01%, Monolithic Power 1.24%, Teradyne 1.18%, NXP 1.13%, Astera Labs 1.00%, Arm 0.96%, STMicroelectronics 0.88%, Microchip 0.85% and ON Semiconductor 0.52%. Cash makes up the rest.
Takeaways:
- Concentration. Nvidia and TSMC together were about 30% of the fund, and the top 10 about 68.5%.
- The whole supply chain. Chip designers (Nvidia, AMD), a foundry (TSMC), memory (Micron, SK Hynix), equipment makers (ASML, Applied Materials, Lam, KLA) and design-software firms (Cadence, Synopsys) are all included. For why memory matters right now, see HBM explained and why RAM is so expensive.
- Global, but US-listed. VanEck's Sep 30 country weights: United States 78.78%, Taiwan 9.24%, Netherlands 5.48%, South Korea 4.40%, United Kingdom 1.13%, Switzerland 0.91%.
Rule 1: who's allowed in
From MarketVector's index guide (v1.04, September 2026):
- Semiconductor focus. A company needs at least 50% of its revenue from semiconductors, meaning production of chips and/or chip equipment. Existing members can stay in at 25%.
- US listing. Securities "must be listed on a US exchange".
- Size and trading. New entrants need a free float of at least 10%, a full market cap above $150 million, average daily trading of at least $1 million, and at least 250,000 shares traded per month. Existing members have lower thresholds, so they don't drop in and out on small moves.
- One share class per company, normally the largest by free-float market cap.
Rule 2: how 25 are picked
- Take the 50 largest eligible companies by full market cap.
- Rank them twice: by free-float market cap and by three-month average daily trading volume. Add the two ranks together.
- Re-rank by that combined score.
- The top 10 are always in. The other 15 places go to the highest-ranked current members ranked 11–40, with new names added only if needed to reach 25.
That "11–40 buffer" is deliberate: it keeps the index from churning members every review.
Rule 3: how much of each
The index starts with free-float market cap weighting, then applies caps:
- The biggest names (components above 4.5%, at least five and at most ten of them) form a "Large-Weights" group, capped at 50% combined.
- Within that group, any single stock is held to 20% max and 5% min.
- Everyone else ("Small-Weights") is capped at 4.5% each.
- Companies with less than 50% semiconductor revenue (allowed as existing members) are limited to 20% combined.
Why Nvidia shows 20.56%, above the 20% cap: caps are applied at each rebalance. Between rebalances, weights move with share prices, so a holding can drift above or below its cap.
Rule 4: when it changes
- Membership review: twice a year, in March and September, using data from the last business day of February and August.
- Rebalance: quarterly, in March, June, September and December. Weights use data from the Wednesday before the second Friday, are announced on the second Friday, and take effect based on closing prices on the third Friday.
The next scheduled rebalance is in December 2026.
How to read any ETF like this
- Find the index name on the fund page. The fund follows it.
- Read the index guide, especially eligibility, selection and caps.
- Check daily holdings for concentration: what share do the top 1, 2 and 10 hold?
- Note the review dates, when holdings can change.
Following the companies inside? See our chip earnings roundup, the AI earnings calendar and how to read a 10-Q.
