World's Largest Semiconductor ETF Manager: CXMT Could Be Added to Its ETFs as Early as Late September

Recently, John Patrick Lee, Senior Product Manager at global asset manager VanEck, revealed in an exclusive interview with this newspaper that U.S. institutional investors have begun positioning themselves in Chinese semiconductors, with CXMT potentially being added to VanEck's ETFs as early as late September.

Founded in 1955 and headquartered in New York, VanEck is a global asset management firm held by its founding family. It has offices in New York, Shanghai, Frankfurt, Zurich, Amsterdam, London, Sydney, and other locations. Its product lineup includes ETFs, mutual funds, and separate accounts. In China, it operates a private institution, VanEck Private Fund Management (Shanghai) Co., Ltd.

As of June 30, 2026, VanEck's global assets under management totaled approximately $237.4 billion. It manages SMH, the world's largest semiconductor ETF, which had total net assets of approximately $70 billion as of early August. In June this year, VanEck launched SMHC in the United States, its first ETF focused on Chinese semiconductors.

U.S. Investors Still in "Education Phase" as Institutions Lead the Way

Lee told reporters that it is difficult for U.S. investors to access Chinese semiconductor companies; furthermore, among China-themed funds in the U.S., whether broad-based or technology-focused, the largest weights are skewed toward software companies such as Tencent, Alibaba, JD.com, and Pinduoduo. Even if semiconductor companies are included, their weighting is very low.

In Lee's view, this presents a rare opportunity. "What we are doing now is laying the groundwork, telling people about the excitement of this opportunity," Lee said. He noted that China is building its entire semiconductor industry from scratch, which is vastly different from traditional models. The Chinese semiconductor market is rapidly catching up with global leaders.

At its inception, approximately $200 million flowed in rapidly. Subsequently, market sentiment shifted, leading to some outflows. Who is buying this Chinese semiconductor ETF? Lee judges that the current narrative is primarily driven by institutions and registered investment advisors (RIAs), not retail investors. Institutions are seeking portfolio diversification and looking to participate in the semiconductor sector from a different angle.

Capital Shifts Toward "China Innovation"

Reporters observed that capital inflows into China-focused ETFs listed in the U.S. are concentrating on the technology sector. Previously, internet companies were the preferred choice for global investors allocating to China, with KWEB once being the largest China ETF; however, this landscape is now shifting.

Lee cited CNXT, VanEck's ETF tracking the ChiNext Index, as an example: this year, the ETF has seen robust capital inflows. Additionally, VanEck's ETF focused on the STAR Market has also attracted significant capital overseas. He believes that overseas investors are chasing the concept of "China Innovation," rather than general beta exposure and internet stocks.

In Lee's view, China currently enjoys many tailwinds in innovation, spanning semiconductors, electric vehicles, batteries, precision manufacturing, robotics, and more. Policy support and investor preference for "buying local, buying domestic" constitute positive factors. Although no sector can rise in a straight line forever and needs room to breathe, he emphasized that these areas have structural support.

CXMT Could Be Added to VanEck ETFs as Early as Late September

Lee stated that SMHC is a passively managed ETF that tracks an index. The inclusion or exclusion of individual stocks is determined by the index provider; the index rebalances quarterly and reconstructs semi-annually. The former adjusts portfolio weights, while the latter determines the investment universe and decides whether to add new stocks.

"Whether CXMT enters the ETF is decided by the index," Lee said. The next rebalancing of the index is scheduled for late September, at which point the portfolio will be reconstructed. "Therefore, CXMT could be included in the ETF during the late September rebalancing and hold a significant weight in the index."

It is understood that the underlying index of SMHC aims to identify the top 25 Chinese semiconductor companies and weight them by size.

Regarding recent volatility in the semiconductor sector, Lee believes it is driven by a combination of factors: significant pullbacks in SK Hynix and Samsung stocks, which led the memory chip rally; sharp short-term valuation increases in related stocks; expectations of Federal Reserve interest rate hikes within the year; and profit-taking after emerging markets outperformed the U.S. for two consecutive years. "This does not mean that the trade in Chinese semiconductors is over."

In South Korea, following the unwinding of leveraged ETF positions, the market is establishing a new baseline, with "dust still settling." Lee stated it is difficult to assert whether the sell-off in Korean semiconductors has ended. What is certain is that "any trend of rising in a straight line for two years is unsustainable."

However, regarding the main theme of AI chips and memory, Lee's stance is clear: "One hundred percent, this story is not over. Whether the story translates into stunning stock price performance is another matter."

In his view, holders of SMHC, the ETF focused on Chinese semiconductors, will remain predominantly institutional for now. However, the diffusion of awareness has already begun—"CXMT's listing made headlines in many global media outlets. This indicates that it is becoming familiar to the general public beyond institutions."

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