When the chips are down

After the midterm elections delivered a sweeping Democratic victory, AI-linked technology stocks sold off as investors considered concerns about regulation of AI and the pace of data centre construction.

Since then, NVIDIA has been involved in a China spy scandal.

As a result, the index the VanEck Global Semiconductor ETF (SMHG) tracks, the MarketVector Global Semiconductor Index (AUD) (SMHG Index) has fallen over 5% from the 1 November to 10 November.

Table 1: SMHG Index largest detractors, 1 to 10 November 2026

Source: VanEck. 31 October to 10 November 2026, Australian dollars, calculated from the fund's daily holdings. Stock names are for illustration only and are not a recommendation to buy or sell. Past performance is not indicative of future performance

Yet earnings expectations remain strong.

Table 2: SMHG earnings expectations

Source: FactSet, VanEck. As at 10 November 2026, based on SMHG's holdings. Aggregate FactSet mean consensus earnings per share for each company's current (FY1) and next (FY2) financial years, compared with its last reported year. Financial year ends differ across companies. Memory makers are Samsung Electronics, SK Hynix, Micron and Kioxia. The median holding is expected to grow earnings by 65% in FY1, and 36 of 37 holdings are expected to grow earnings. Forecasts are not guaranteed and may change.

Despite the sharp decline in share prices, earnings expectations for SMHG’s holdings have continued to rise. Earnings per share growth across all holdings is expected to be 156.8% for one year forward (60.4% excluding memory makers).

In Table 3, SMH fundamentals remain supportive, with price to earnings well below its 5-year average.

Table 3: SMHG valuation snapshot

Source: FactSet, VanEck. Weighted aggregates of each company's FactSet valuation ratios at quarter ends, using SMHG's holdings as at 10 November 2026 held constant (harmonic averages for price multiples, arithmetic for dividend yield). The 10 November figures update the 30 September 2026 quarter for SMHG's price change since then. Five-year average of quarterly values, December 2021 to September 2026. SMHG listed in August 2026; figures before that date are hypothetical are based on the SMHG Index.

SMHG Index now trades at its lowest forward P/E on record (Chart 1). In our view, SMHG’s sell-off since June has been driven by interest rates, scrutiny of AI spending, political uncertainty and now company-specific issues. Earnings forecasts for the companies SMHG holds are still strong. As a result, SMHG Index's forward valuation has fallen from 19.4x in June to 10.1x, (34.0x in June to 20.0x now if we exclude memory markers), below its long-run averages.

For long-term investors in the sector's structural growth, valuations now offer a considerably more attractive starting point than at any time in several years.

Chart 1: Valuations have reset: Price to next 12 months consensus earnings, SMHG’s current holdings

Source: FactSet. Monthly, 31 October 2016 to 31 October 2026, and 10 November 2026. Aggregate price to next 12 months consensus earnings of VanEck Global Semiconductor ETF (SMHG) holdings as at 10 November 2026 , held constant and applied historically. SMHG listed in August 2026; figures before that date are based on the index and do not reflect actual fund holdings, instead are based on the SMHG Index. Memory makers are Samsung Electronics, SK Hynix, Micron and Kioxia. Forecasts are not guaranteed and may change. Past performance is not indicative of future performance.

Table 4: SMHG forward valuations

Source: FactSet, VanEck. As at 10 November 2026, based on SMHG's holdings. Aggregate FactSet mean consensus earnings per share for each company's current (FY1) and next (FY2) financial years, compared with its last reported year. Financial year ends differ across companies. Memory makers are Samsung Electronics, SK Hynix, Micron and Kioxia. The median holding is expected to grow earnings by 65% in FY1, and 36 of 37 holdings are expected to grow earnings. Forecasts are not guaranteed and may change.

Investors looking for exposure to semiconductors can access it through VanEck Global Semiconductor ETF (SMHG). provides exposure to the top global semiconductor companies, spanning the entire industry value chain from chip design manufacturers and equipment firms.

Powering the technology revolution

Semiconductors are the foundational building blocks of modern technology.

Targeted access to a generational inflection point

An international exposure to the AI, cloud, electrification and automation megatrends fuelling insatiable demand for faster, more energy-efficient chips.

Access all stages of the value chain

Gain exposure to chip designers, manufacturers and equipment firms through a single portfolio.

Key risks

An investment in the ETF carries risks associated with: ASX trading time differences, financial markets generally, individual company management, industry sectors, foreign currency, country or sector concentration, political, regulatory and tax risks, fund operations and tracking an index. See the PDS and TMD for more details.

Who is SMHG suitable for?

SMHG is likely to be appropriate for a consumer who is seeking capital growth, is intending to use the product as a satellite allocation within a portfolio, has an investment timeframe of at least 5 years, and has a very high risk/return profile.