REX Launches ETF Targeting AI Chip Manufacturing Equipment
The new fund targets the machinery that builds silicon, excluding material suppliers, with a 0.65% fee.
Key points
- The REX AI Chipmaking ETF launches on Nasdaq with a 0.65% expense ratio and 55 holdings.
- Wafer fabrication equipment holds a 50% weighting in the VettaFi index, ahead of packaging and metrology.
- The US and Japan together account for roughly two-thirds of the index's country weighting.
REX Advisers is launching a new exchange-traded fund on Nasdaq that focuses exclusively on the physical tools used to manufacture artificial intelligence chips. Unlike funds that track chip designers, the REX AI Chipmaking ETF invests in the industrial equipment makers that build the silicon wafers and testing infrastructure.
According to the fund’s prospectus, the strategy targets three specific areas of production: wafer fabrication, advanced packaging, and metrology. By excluding chemical suppliers and raw material vendors, the fund aims to capture value from the specialized machinery and precision testing tools that are increasingly seen as bottlenecks in the AI supply chain.
Index structure defines the machine focus
The ETF tracks the VettaFi AI Chipmaking Index, which assigns a 50% weighting to wafer fabrication equipment. This segment includes the heavy machinery required to create the base silicon wafers. An additional 25% is allocated to advanced packaging, which handles the assembly processes that improve chip speed and power efficiency.
The final 25% covers metrology, the precision testing used to verify chip quality during manufacturing. To be included, a company must derive more than half of its revenue from one of these three segments. This strict criteria ensures the portfolio remains focused on the capital-intensive equipment side of the industry rather than the software or design layers.
Concentration in US and Japanese firms
Geographic exposure is heavily concentrated in two countries. As of late August, the United States accounts for 35.3% of the index, while Japan holds 30.5%. Together, these two markets represent roughly two-thirds of the total weighting. The Netherlands and Taiwan follow at 13.7% and 6.8% respectively, indicating a strong reliance on established industrial powerhouses.
High costs and concentrated holdings present trade-offs
Investors face a 0.65% expense ratio, which is higher than the average for broad-market technology ETFs. The fund holds 55 companies that are rebalanced quarterly. The top ten holdings make up 52.5% of the portfolio, led by Advantest Corp at 7.8%, followed by ASE Technology Holding and Teradyne.
While the underlying index has climbed 126.6% over the past year, the high expense ratio and significant concentration in a few large-cap manufacturers represent distinct trade-offs. As reported by ETF Database, this fund offers a narrow bet on industrial hardware, appealing to those who believe the bottleneck in AI growth lies in physical production capacity rather than software innovation.
