One of this year’s most prominent themes in the technology sector is semiconductor supplies, or lack thereof. A massive global chip shortage is affecting an array of industries, with automobile manufacturers front and center.

However, it appears that chips stocks and exchange traded funds didn’t get the memo. The VanEck Vectors Semiconductor ETF (SMH) is higher by more than 28% year-to-date and flirting with all-time highs. That move is being supported by credible fundamentals.

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“Worldwide sales of semiconductors totaled $144.8 billion during the third quarter of 2021, an increase of 27.6% over the third quarter of 2020 and 7.4% more than the second quarter of 2021. More semiconductor units were shipped during the third quarter of 2021 than during any other quarter in the market’s history,” says the Semiconductor Industry Association (SIA) in a statement released on Monday.

SMH is higher by 12% over the past month and by 17.45% over the past six months, indicating that it’s proving responsive to the industry’s impressive recent sales trajectory.

“Global sales for the month of September 2021 were $48.3 billion, an increase of 27.6% over the total from September 2020 and 2.2% more than sales from August 2021. Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average,” adds SIA.

The trade group, formed in 1977, represents 98% of U.S.-based semiconductor producers and two-thirds of the international side of the industry. Domestic companies account for almost 73% of SMH’s weight, with over 15% allocated to international companies. The bulk of that ex-U.S. exposure comes by way of Taiwan Semiconductor (NYSE:TSM). That’s SMH’s largest component, which makes sense because it operates the world’s biggest chip foundry. That stock and Nvidia (NASDAQ:NVDA) combine for over 27% of the ETF’s roster.

While SMH, which holds 25 stocks, is heavy on U.S.-based companies, the fund is actually an ideal avenue for international exposure because of the global composition of the semiconductor industry.

“Regionally, year-to-year sales increased in the Americas (33.5%), Europe (32.3%), Asia Pacific/All Other (27.2%), Japan (24.5%), and China (24.0%). Month-to-month sales increased in the Americas (3.9%), Europe (2.0%), Japan (2.0%), Asia Pacific/All Other (1.9%), and China (1.5%),” notes SIA.

Plenty of SMH’s U.S.-based member firms count on those regions as marquee end markets.

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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.