ETFs to Capitalize on TSM's Impressive Q2 Earnings

Globe and Mail

6 days ago

Taiwan Semiconductor Manufacturing TSM reported robust second-quarter 2025 results, reflecting strength in AI and HPC-related demand, continued advanced node leadership and solid execution on global expansion. The company beat estimates for both the top and the bottom lines on surging demand for advanced chips used in AI applications.
Investors seeking to tap TSM's growth could consider ETFs having the largest allocation to the world's largest contract semiconductor manufacturer. These include SP Funds S&P World ex-US ETF SPWO, SP Funds S&P Global Technology ETF SPTE, VanEck Vectors Semiconductor ETF SMH, Matthews Emerging Markets ex China Active ETF MEMX and Global X Emerging Markets ex-China ETF EMM.
Earnings in Focus
Taiwan Semiconductor reported earnings per ADR of $2.47, which outpaced the Zacks Consensus Estimate of $2.37 and improved 60.7% from the year-ago earnings. Revenues rose 38.6% year over year to $30.07 billion and were above the consensus estimate of $30.04 billion. TSMC's high-performance computing division, which encompasses artificial intelligence and 5G applications, drove sales in the second quarter, contributing 60% of revenues.
The world's largest contract chip manufacturer has been benefiting from the megatrend toward AI as it gains from producing advanced processors (3-nanometer and 5-nanometer technologies) for clients, including NVIDIA (NVDA) and Apple AAPL. The 5-nanometer wafer accounted for 36% of total revenues in the second quarter, followed by the 3-nanometer wafer at 24% and the 7-nanometer wafer at 14% (read: Tech ETFs Hit New Highs as NVIDIA Powers Market Rally).
For the third quarter of 2025, the company expects revenues of $31.8-$33 billion. The Zacks Consensus Estimate is pegged at $30.69 billion. TSM also expects its full-year 2025 revenues to rise by around 30% in U.S. dollar terms, supported by growth in AI and demand for its most advanced technologies.
ETFs to Tap
Let's delve into each ETF below:
SP Funds S&P World ex-US ETF (SPWO)
SP Funds S&P World ex-US ETF tracks the S&P DM Ex-U.S. & EM 50/50 Shariah Index, which is designed to measure the performance of sharia-compliant components of emerging market and developed market stocks, excluding U.S. stocks. It holds a basket of 375 stocks, with Taiwan Semiconductor taking the top spot at 16.8%. SP Funds S&P World ex-US ETF has accumulated $61.6 million in its asset base. It charges 55 bps in annual fees and trades in a lower average trading volume of 11,000 shares. SPWO has a Zacks ETF Rank #4 (Sell).
SP Funds S&P Global Technology ETF (SPTE)
SP Funds S&P Global Technology ETF focuses on large and mid-cap technology stocks from around the world, with a specific emphasis on companies pioneering in areas like e-commerce, cloud computing and healthcare technology. It follows the S&P Global 1200 Shariah Information Technology index and holds 94 stocks in its basket. Taiwan Semiconductor occupies the second position with an 11.1% share. SP Funds S&P Global Technology ETF has accumulated $61.6 million in its asset base and charges 55 bps in fees per year. It trades in a volume of 11,000 shares a day on average.
VanEck Vectors Semiconductor ETF (SMH)
VanEck Vectors Semiconductor ETF offers exposure to companies involved in semiconductor production and equipment. It follows the MVIS US Listed Semiconductor 25 Index, which tracks the most liquid companies in the industry based on market capitalization and trading volume. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket, with Taiwan Semiconductor occupying the second position at 11.3%. VanEck Vectors Semiconductor ETF has managed assets worth $27.3 billion and charges 35 bps in annual fees and expenses. SMH trades in an average daily volume of 8 million shares and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Tariff-Led Volatility Ahead for Big Tech? ETFs in Focus).
Matthews Emerging Markets ex China Active ETF (MEMX)
Matthews Emerging Markets ex China Active ETF seeks alpha in Global Emerging Markets ex China and capitalizes on consumption and innovation trends. It holds 76 stocks, with TSM being the top firm with 11.6% share. Matthews Emerging Markets ex China Active ETF has AUM of $35.5 million and charges 79 bps in annual fees. It trades in a volume of 1,000 shares a day on average.
Global X Emerging Markets ex-China ETF (EMM)
Global X Emerging Markets ex-China ETF is an actively managed fund seeking to invest in emerging market companies, excluding China, which are believed to achieve or maintain a dominant position within their respective market. As part of its investment strategy, EMM aims to identify early winners in growing industries where entrepreneurship can produce long-term global competitiveness. Global X Emerging Markets ex-China ETF holds 49 stocks in its basket, with Taiwan Semiconductor taking the second position at 15.2% share. Global X Emerging Markets ex-China ETF has AUM of $27.3 million and charges 76 bps in annual fees. It trades in a volume of 26,000 shares a day on average.
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Apple Inc. (AAPL): Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
SP Funds S&P World (ex-US) ETF (SPWO): ETF Research Reports