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Chapter 1: What is the Semiconductor ETF (ASX: SEMI) and why is it important?
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This podcast contains general financial advice only. That means it's not specific to you, your needs, goals or objectives. So don't act on the information until you've spoken with your financial advisor. You'll find our full disclosure, disclaimer and link to our financial services guide in the show notes. Ganesh, welcome back to the podcast, mate. It's always a pleasure.
Oh, yeah. Thanks for being back.
Today, we're going to talk about a really popular ETF that you and the team at ETF Securities have just launched, which is the Semi ETF, as most people know it. Investing in and around the semiconductor industry, it's a really interesting one, particularly coming out of the COVID pandemic. We see supply chain bottlenecks, lots of delays on people's favorite products, whether it's an iPad,
or whether it's something for a car or anything basically electrical, people are thinking, when am I going to get this thing delivered? Most of us blame Australia Post, but sometimes it's other things that are impacting the supply chain way back kind of at the, I guess, the fulcrum of the internet technologies and just technologies, generally speaking.
And that is kind of in this microchip and semiconductor space. So let's just kick things off. Tell us a little bit about Sebi Conductors, what they are, the industry, and basically like what are the key kind of dynamics in this industry?
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Chapter 2: How do supply chain issues affect the semiconductor industry?
So it's a really interesting company from that perspective, but it's a company, again, not many people would know of it. It's very specific in the equipment that it produces, but it's a company there that really is crucial within the industry at the moment. So I think that that's a very interesting one. Another one that I mentioned is ASML.
And you and I have spoken about ASML before, so I won't go into too, you know, I won't spend too long on it, but, you know, essentially it's got a monopoly on the lithography machines, which is the, essentially it's the machine that puts transistors onto microchips. And, you know, for a machine that costs, you know, 130, 140 million US dollars, that is a company that essentially, you know,
is operating in a space that no one else can produce that technology. So again, it's one of the companies that now has become well-known, but it's been producing this machine for many years and has that sort of, from their perspective, is a leader in that space. People know about Taiwan Semiconductors. AMD is sort of an American. We talk about that sort of chip designers.
So the Fabless, and named is an interesting one because many years ago, you would have said, well, it's nearly bankrupt, you know, about five years ago, but it's really done a big turnaround. It produces now some of the best central processing units of the CPU. So what a lot of our computers,
What a lot of, you know, you can when you consider, you know, iPhones and things like that, or, you know, some of the smartphones that they use some AMD chips. Now, what's actually really interesting is that it's also the preferred choice for a lot of data centers.
so if we're talking about cloud computing so you know we talk about thematics and semiconductors potentially is at the heart of a lot of other mega trends so cloud computing you know that's how we're going to be sort of using and storing data well amd
is at the heart of that so you know google cloud has recently talked to amd about producing processes for its servers um so they're just a few of the companies that are really interesting that are working in this particular space um in terms of where we see the industry going
Yeah, what's interesting about the ETF, the semi ETF, is that you can have a company like ASML, which is from the Netherlands, and you can combine that with a company like Taiwan Semiconductor, and you can have US companies in there as well. So you can kind of get that basket approach. And that's why we love ETFs, right? in general.
So if you're looking for this thematic, you kind of get them all in the basket, which is really interesting. Tell us a little bit more about the ETF then and how it, I guess, well, not as much the ETF, but also the index. What index does it follow? How are companies screened? I know that there's a cap on weightings. And how is the portfolio constructed?
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