VanEck Launches China Semiconductor ETF with 0.65% Fee
KWEB•VanEck rolled out the 0.65%-expense VanEck China Semiconductor ETF (SMHC), tracking the 25 largest Chinese chipmakers and trading 2.8 million shares on its first Monday. The fund taps China’s planned 2 trillion-yuan AI infrastructure investment and could replicate the multibillion-dollar success of the KraneShares CSI China Internet ETF (KWEB).
1. ETF Launch and Structure
VanEck introduced the VanEck China Semiconductor ETF (SMHC), carrying a 0.65% expense ratio and tracking the MarketVector China Semiconductor 25 Index. The fund debuted with 2.8 million shares traded, offering investors exposure to the 25 largest Chinese semiconductor companies.
2. China’s AI Infrastructure Investment
Beijing plans to allocate roughly 2 trillion yuan ($295 billion) over five years to a state-directed AI infrastructure program, excluding private investment by Alibaba, Tencent and other tech firms. This massive spending drive positions semiconductors at the core of China’s national AI strategy.
3. Geopolitical and Technological Barriers
U.S. export restrictions block advanced Nvidia chips and leading-edge lithography, forcing China to focus on domestic chip development. Sanctioned companies like SMIC cannot be included in SMHC, and dependency on homegrown silicon remains a critical challenge.
4. Competition Dynamics and KWEB Comparison
SMHC may follow in the footsteps of the KraneShares CSI China Internet ETF (KWEB), which grew into a multibillion-dollar fund by providing niche China exposure. Investors should weigh compressed valuations, state intervention risks, and the exclusion of key players when considering SMHC.
