Semiconductors Power the Digital Economy. SOXX Bets Everything on That. XLK Doesn't Have To.
Key Points
State Street Technology Select Sector SPDR ETF has a lower expense ratio of 0.08% compared to the 0.34% charged by iShares Semiconductor ETF.
While iShares Semiconductor ETF focuses exclusively on 30 semiconductor companies, State Street Technology Select Sector SPDR ETF holds a broader basket of 72 technology stocks.
iShares Semiconductor ETF has delivered higher one-year total returns but experienced a more severe maximum drawdown over the last five years.
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State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) provides broad technology exposure at a significantly lower cost, while iShares Semiconductor ETF (NASDAQ:SOXX) offers a concentrated, higher-volatility play specifically on the semiconductor industry.
Both funds serve as primary vehicles for tech-heavy portfolios but differ sharply in their scope. While SOXX isolates the semiconductor sub-sector, XLK captures the wider S&P 500 technology landscape. Choosing between them may depend on whether an investor seeks pure-play chip exposure or diversified software and hardware giants.
Snapshot (cost & size)
| Metric | SOXX | XLK |
|---|---|---|
| Issuer | iShares | SPDR |
| Expense ratio | 0.34% | 0.08% |
| 1-yr return (as of June 3, 2026) | 190.10% | 66.90% |
| Dividend yield | 0.30% | 0.40% |
| Beta | 1.78 | 1.33 |
| AUM | $40.7 billion | $127.7 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The State Street fund is significantly more affordable than the iShares fund. Additionally, XLK offers a slightly higher trailing-12-month dividend yield of 0.40%, compared to 0.30% for SOXX.
Performance & risk comparison
| Metric | SOXX | XLK |
|---|---|---|
| Max drawdown (5 yr) | (45.80%) | (33.60%) |
| Growth of $1,000 over 5 years (total return) | $4,402 | $2,912 |
What's inside
State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) provides diversified exposure to the technology sector, including software, hardware, and communications equipment. It holds 72 positions and was launched in 1998. Its largest positions include Nvidia (NASDAQ:NVDA) at 13.30%, Apple (NASDAQ:AAPL) at 11.37%, and Microsoft (NASDAQ:MSFT) at 8.05%. The fund has a trailing-12-month dividend of $0.76 per share. It allows for strategic positioning within the S&P 500 tech index without the narrow concentration of a single-industry fund.
iShares Semiconductor ETF (NASDAQ:SOXX) tracks 30 U.S.-listed semiconductor equities and was launched in 2001. Its largest positions include Micron Technology (NASDAQ:MU) at 11.94%, Advanced Micro Devices (NASDAQ:AMD) at 9.22%, and Marvell Technology (NASDAQ:MRVL) at 8.42%. It has paid $1.67 per share over the trailing 12 months. Because it focuses entirely on the chip industry, it is more susceptible to the cyclicality of semiconductor demand than its broader peer.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Every major technology trend of the past decade, from cloud computing to smartphones and AI, has run on semiconductors. Chips are not just a technology subsector; they are the physical infrastructure that makes the entire digital economy possible. Global semiconductor sales are projected to reach nearly $1 trillion in 2026, driven by surging demand for AI chips. That backdrop has made SOXX one of the most closely watched sector funds in the market.
The question worth asking is whether that concentration is a feature or a risk. SOXX has delivered stronger long-term returns than XLK, but its maximum drawdown exceeded 45% in 2022 when the chip cycle turned. XLK's broader approach spanning software, hardware, and IT services alongside semiconductors cushioned that blow considerably. Owning the whole technology sector means never being fully exposed to any single part of it breaking down.
For investors who want reliable, low-cost exposure to American technology leadership, XLK is the more dependable foundation. SOXX is the fund for those with genuine conviction that semiconductors will continue to outpace broader tech and who can stomach sharp downturns when the chip cycle inevitably turns.
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Sara Appino has positions in Apple and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Marvell Technology, Micron Technology, Microsoft, Nvidia, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.
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