AI Chip Trade Is Getting More Leveraged — Meet REX’s New 3X Bets - VanEck Semiconductor ETF (NASDAQ:SMH)

The semiconductor trade is entering a pivotal stretch, with investors pouring billions into chip ETFs even as the sector experiences sharp swings. Strong AI-driven demand and elevated volatility are creating fertile ground for leveraged products.

Semiconductor ETFs have attracted record inflows this year, as chipmakers remain at the center of the artificial intelligence infrastructure boom. Nvidia Corp (NASDAQ:NVDA) continues to ramp its next-generation Vera Rubin platform, while Taiwan Semiconductor Manufacturing Co. Ltd (NYSE:TSM) has reported strong revenue growth as demand for advanced AI processors accelerates.

At the same time, investors are questioning whether massive AI capital spending can continue at its current pace, contributing to sharp swings across semiconductor stocks. That backdrop is particularly attractive for traders seeking leveraged exposure.

REX Adds 3X Semiconductor Exposure

Against this backdrop, REX Shares and BMO launched two new exchange-traded notes on Tuesday: the MicroSectors 3X Long Semiconductor ETN (BATS:SMHU) and MicroSectors -3X Short Semiconductor ETN (BATS:SMHD).

The ETNs track the daily performance of the VettaFi Semiconductor Fund-Tracking Index, offering 3X long and -3X inverse exposure, respectively. The index provides leveraged exposure to the semiconductor sector through a strategy tied to the popular VanEck Semiconductor ETF (NASDAQ:SMH).

SMH has gained 60% year-to-date. The fund is also highly concentrated, with Nvidia accounting for more than 20% of assets and Taiwan Semiconductor representing another significant position.

SMHU and SMHD will charge a 70-basis-point expense ratio after an initial six-month fee waiver. That compares with 75 basis points for the Direxion Daily Semiconductor Bull 3X ETF (NASDAQ:SOXL) and 100 basis points for its bearish counterpart, Direxion Daily Semiconductor Bull 3X ETF (NASDAQ:SOXS).

Leveraged ETFs Continue to Grow

The launch comes amid a broader boom in leveraged exchange-traded products. The U.S. leveraged ETF market has grown to roughly $200 billion in assets, with more than 400 of about 700 leveraged ETFs launched during the past two years, according to Baird Strategas.

Semiconductors have been a major beneficiary of this appetite, given their combination of strong AI-related growth prospects and significant short-term volatility.

For traders, SMHU and SMHD provide tools to capitalize on semiconductor moves in either direction. However, their 3X daily structure makes them tactical instruments, as daily compounding can cause longer-term returns to differ substantially from three times the underlying index’s cumulative performance.