Best Chip ETFs to Capitalize on the US-Taiwan Semiconductor Partnership

In mid-January 2026, the global semiconductor landscape shifted dramatically with the announcement of a landmark $500 billion partnership between the United States and Taiwan aimed at reshoring advanced chip production to American soil. This strategic agreement represents one of the most significant industrial policy moves in recent memory, creating unprecedented opportunities for investors seeking exposure to the booming chip manufacturing sector. For those looking to gain diversified access to this opportunity, best chip ETFs offer an efficient way to tap into the reshoring momentum without betting on individual companies.

The deal commits Taiwanese semiconductor companies to invest at least $250 billion in U.S. fabrication capacity, while Taiwan’s government pledges $250 billion in credit guarantees to support smaller supply chain partners relocating stateside. In exchange, the U.S. has agreed to provide substantial tariff relief, capping rates at 15% down from 20%, and offering zero reciprocal tariffs on pharmaceuticals, aircraft components, and critical natural resources. This policy framework is designed to strengthen America’s domestic semiconductor ecosystem while countering rising competition from China’s growing technological capabilities.

How the Deal Reshapes the Semiconductor Ecosystem

The partnership creates a cascading effect throughout the entire chip industry value chain. Companies that manufacture fabrication plants (fabs) will benefit most directly from tariff-free equipment imports during construction and operation phases. Taiwan Semiconductor Manufacturing Company (TSM), the world’s leading chip foundry, emerges as the primary winner—the company has already secured hundreds of acres in Arizona with plans to significantly expand its U.S. presence. TSM has committed to spending $100 billion on American production facilities, building on its existing $40 billion investment already supported by the CHIPS Act.

Beyond the foundry giants, the agreement creates powerful tailwinds across the entire ecosystem:

Semiconductor Equipment Suppliers: Manufacturers like Applied Materials (AMAT), ASML Holding (ASML), Lam Research (LRCX), and KLA Corporation (KLAC) will see sustained demand as new fabs ramp up and require advanced tooling and infrastructure.

U.S. Chip Design Leaders: Major technology firms including Nvidia (NVDA), Microsoft (MSFT), Broadcom (AVGO), and Apple (AAPL) benefit from having a more secure, geographically proximate semiconductor supply chain. This proximity reduces supply chain risks and potentially lowers manufacturing costs for their most advanced processors.

American Memory Manufacturers: Micron Technology (MU), one of the few remaining U.S.-based memory chip producers, stands to benefit from increased demand for memory solutions as the domestic semiconductor ecosystem expands. Micron’s existing fabrication facilities in New York and Idaho align perfectly with the deal’s reshoring objectives.

Why Best Chip ETFs Outperform Single-Stock Strategies

Individual semiconductor stocks carry concentrated risks. A single company could face delays in fab construction, struggle to execute on an advanced manufacturing node, or see demand shift for specific products—any of which could severely damage individual stock performance even within a favorable industry trend. The semiconductor industry’s volatility and intense competition amplify these company-specific risks.

Diversified chip ETFs solve this dilemma by providing instant exposure to dozens of companies across the entire value chain—from equipment makers to chip designers to memory manufacturers. This approach mitigates idiosyncratic risk while maintaining pure exposure to the powerful macro tailwinds driving the reshoring movement, artificial intelligence adoption, and automotive semiconductor innovation.

Best Chip ETFs to Consider

VanEck Semiconductor ETF (SMH)

Commanding $42.49 billion in net assets, SMH provides exposure to 26 semiconductor-related companies. Its top holdings include Nvidia (19.17%), TSM (10.45%), and Broadcom (7.68%). The fund has delivered a 57.1% return over the past year, with a competitive expense ratio of 35 basis points. Average daily trading volume reaches 9.94 million shares, ensuring excellent liquidity. SMH carries a Zacks ETF Rank of #1 (Strong Buy).

iShares Semiconductor ETF (SOXX)

With $20.28 billion in assets under management, SOXX tracks 30 U.S.-listed semiconductor companies involved in design, manufacturing, and distribution. Top holdings include Micron Technology (7.39%), Nvidia (7.36%), and Advanced Micro Devices (7.31%). The fund returned 51.9% over the past twelve months at a 34 basis point fee. Daily volume averaged 6.52 million shares, providing strong trading liquidity. SOXX also earned a Zacks ETF Rank #1 rating.

Invesco PHLX Semiconductor ETF (SOXQ)

This fund focuses on the 31 largest U.S.-listed semiconductor companies, holding $921.5 million in assets. Its portfolio emphasizes Nvidia (11.29%), Broadcom (7.67%), and AMD (7.48%). SOXQ has climbed 52.7% over the past year with the lowest fee structure among the three options at 19 basis points. The fund trades with an average daily volume of 0.59 million shares and maintains a Zacks ETF Rank #1.

Strategic Considerations for Chip ETF Investors

The choice among these best chip ETFs depends on individual portfolio objectives. Investors seeking maximum exposure to mega-cap chip leaders may prefer SMH’s concentrated holdings in Nvidia and TSM. Those wanting broader diversification across 30 companies might lean toward SOXX, which includes memory manufacturers like Micron. SOXQ offers the lowest fees for cost-conscious investors, though with lighter trading volume.

All three funds offer meaningful upside as the U.S.-Taiwan partnership unfolds over coming years. The reshoring movement represents a multi-year investment thesis as new fabs are built, equipped, and brought to production capacity. The estimated decade-long construction and ramp timeline creates sustained demand for equipment manufacturers, design software providers, and the entire supporting ecosystem.

By choosing one of these best chip ETFs rather than betting on individual semiconductor companies, investors can participate in the reshoring boom while maintaining portfolio diversification and managing downside risk from inevitable industry volatility and competitive pressures within the sector.