VanEck launches China Semiconductor ETF as Beijing invests $98 billion
VanEck has launched the VanEck China Semiconductor ETF (SMHC) to provide targeted exposure to China's domestic semiconductor sector. The fund tracks the MarketVector China Semiconductor 25 Index and holds 25 companies meeting strict revenue criteria. This move capitalizes on China's position as the top spender on semiconductor equipment in 2025 and the government's $98 billion investment via the National IC Fund.
*this image is generated using AI for illustrative purposes only.
VanEck has launched the VanEck China Semiconductor ETF (NASDAQ: SMHC), a fund designed to provide investors with pure-play exposure to China’s expanding domestic semiconductor industry. The launch extends VanEck’s semiconductor ETF lineup, which already includes the VanEck Semiconductor ETF (NASDAQ: SMH) and the VanEck Fabless Semiconductor ETF (NASDAQ: SMHX). This new fund aims to address the lack of exposure to China’s domestic semiconductor build-out found in most global portfolios, which are typically concentrated in U.S., Taiwanese, and European companies.
John Patrick Lee, Senior Product Manager at VanEck, stated that SMHC was designed to bridge the gap in global portfolios through a rules-based investment vehicle focused exclusively on companies benefiting from China’s semiconductor expansion. The fund arrives as China accelerates efforts to build a self-sufficient chip ecosystem amid ongoing U.S. export restrictions.
Key Features of SMHC
The VanEck China Semiconductor ETF tracks the MarketVector China Semiconductor 25 Index. It invests only in companies headquartered or incorporated in China or Hong Kong. To be included, constituents must derive at least 50% of revenue from semiconductors or semiconductor equipment. The portfolio holds 25 companies selected through a rules-based methodology and is weighted by modified free-float market capitalization with position caps. The index is rebalanced quarterly.
Strategic Opportunity and Market Context
VanEck identifies a significant opportunity driven by government policy and market dynamics. China was the world’s largest spender on semiconductor manufacturing equipment in 2025, outspending every other country or region. Beijing has made semiconductor self-sufficiency a national priority, directing government agencies, state-owned enterprises, and strategic industries to favor domestic suppliers. Additionally, U.S. export controls have accelerated demand for homegrown alternatives across the semiconductor supply chain.
Financial Commitments
China’s National IC Fund has played a crucial role in this expansion. The fund has committed approximately $98 billion across three phases since 2014. The latest phase, launched in 2024, allocated $47.5 billion to support semiconductor development.
| Metric | Detail |
|---|---|
| Fund Name | VanEck China Semiconductor ETF |
| Ticker | NASDAQ: SMHC |
| Index Tracked | MarketVector China Semiconductor 25 Index |
| Number of Holdings | 25 companies |
| Revenue Requirement | Minimum 50% from semiconductors/equipment |
| Rebalancing Frequency | Quarterly |
How might further escalation of U.S. export controls impact the performance and viability of the underlying holdings in the SMHC?
What are the risks of over-concentration in domestic Chinese suppliers given the global dominance of established players in Taiwan and the U.S.?
Could the success of China's self-sufficiency drive lead to a glut in semiconductor capacity, potentially affecting global chip pricing?
19
Access 50+ Readymade Screeners 
Use 200+ Custom Filters 
Get Full Market Insights 
