Semiconductor exchange traded funds (ETFs) seem likely to benefit from Broadcom’s (BRCM) chips and software that will be in new cell phones launched for the holidays by Samsung Electronics. Broadcom is the No. 2 cell phone maker and is selling the phones with Broadcom’s advanced 3G (third-generation) cellular technology in Europe, Asia, Africa, Australia and other areas, reports Trang Ho for Investor’s Business Daily. Deutsche Bank estimates that Samsung will produce 1 million units with Broadcom chips this year and 4 million to 5 million units next year. Some analysts expect Broadcom’s sales growth to accelerate from 3% to 16% over the next four quarters.
The company is a major component in three chip ETFs: SPDR S&P Semiconductor (XSD), iShares S&P GSTI Semiconductor Index (IGW) and ProShares Ultra Semiconductor (USD), which doubles the daily performance of the Dow Jones U.S. Semiconductors Index. Two of the three ETFs are trending upward. Year-to-date, XSD is up 11.9%, IGW is up 12% and USD is down 1.6% for the last three months, having launched in January. Volatility tends to follow USD because it’s a leveraged ETF.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.