Strive Asset Management launches its third index fund today, the Strive U.S. Semiconductor ETF, offering investors the opportunity to gain broad exposure to the U.S. semiconductor sector amid escalating geopolitical risk in Taiwan, the nation responsible for manufacturing 60% of the world’s foundry semiconductors. Semiconductors are the essential computing hardware for mobile phones, computers, cars, and even refrigerators. Global Semiconductor demand is estimated to grow over 80% by 2030.1
Strive’s ETF launch comes at a time of unprecedented cross-Straits tension. The Chinese Communist Party (CCP) appears very likely to select Xi Jinping for a third term as China’s leader, breaking the historical two-term chain of succession and making President Xi the longest-serving Chinese ruler since Mao Zedong. Strive believes this increases the risk that China will attempt to annex Taiwan in the near future, exacerbating global semiconductor supply shortages and increasing the risk of economic calamity in the U.S. and other countries.
Strive anticipates that U.S. semiconductor stocks could potentially outperform the market if China were to annex Taiwan. Through SHOC, Strive mandates U.S. semiconductor companies to prepare for this scenario by increasing domestic production capabilities, providing long-term opportunity and potential growth in the industry. At launch, only 12% of the plant, property, and equipment (PPE) of the companies in the Strive U.S. Semiconductor ETF are exposed to China/Taiwan risk.
Vivek Ramaswamy, Strive’s executive chairman and co-founder said, “Our global economy is dependent on access to Taiwanese-produced semiconductors, which may effectively go to zero if China escalates its political and military tactics against Taiwan. We think that U.S. semiconductor stocks offer a potential hedge against this risk, especially if U.S. semiconductor companies prepare themselves to fill the supply vacuum created by a potential blockade or invasion of Taiwan. We plan to deliver that message as a shareholder to these companies, unapologetically and without regard to Chinese business interests: unlike many of our larger competitors, Strive does not and will not operate an asset management business in China.”