Why the iShares Semiconductor ETF Rallied 12% in January

Core Viewpoint - The semiconductor sector has shown strong performance in January 2025, driven by earnings results from TSMC and rising memory prices, with the iShares Semiconductor ETF (SOXX) rallying 12% [1][3]. Group 1: ETF Performance - The iShares Semiconductor ETF (SOXX) increased by 12% in January, with a notable daily change of 5.34% [1][4]. - The ETF provides diversified exposure to 30 semiconductor companies, with no single stock exceeding 8% weight at rebalancing [2]. Group 2: Memory Prices and AI Impact - The memory and storage sectors have experienced a boom, with traditional DRAM prices expected to rise by 90% to 95% and NAND flash prices projected to increase by 55% to 60% [6]. - The demand surge for memory chips is attributed to the AI infrastructure buildout transitioning from training to deployment, increasing the need for DRAM, NAND flash, and enterprise CPUs [5][6]. Group 3: Company Earnings and Capital Spending - TSMC reported strong earnings and forecasted capital spending of $52 billion to $56 billion for 2026, a 40% increase from 2025 [7]. - Micron, the largest weighting in the ETF, saw its stock rally by 45.6% in January due to the surge in memory prices [6][8]. Group 4: Market Trends and Future Outlook - Despite a decline of 4.6% in February, driven by profit-taking after AMD's earnings report, the overall outlook for AI infrastructure spending remains positive for 2026 [10][11]. - Major cloud companies have provided higher-than-expected capital spending forecasts, indicating continued growth in AI infrastructure [11].