Philadelphia Semiconductor Index (SOX) - Chip Industry

What is the SOX?

The Philadelphia Semiconductor Index (SOX) is one of the most heavily traded indices on the Philadelphia Stock Exchange.  The SOX is a price weighted index of the 19 U.S. semiconductor companies.  The SOX is comprised of 15 chip makers and 4 semiconductor equipment makers.  Due to the advent of the computers, the SOX has been one of the most heavily traded indices in the market since its inception in 1993. 

Why is the SOX Important?

The SOX is important because it tracks the chip components in the market which fuel the technology sector as a whole.  Traders can utilize the SOX to anticipate market bottoms and tops as the index often leads the broad stock market.

Negatives of the SOX

Since the Philadelphia Semiconductor Index is price weighted, stocks like Intel can make up 15% to 25% of the index on any given day.  This is somewhat troubling as moves in Intel will have a greater effect on the index at large.  Another negative is that from 2003 through 2008 the SOX has been in a trading range between 600 and 400.  So, if a trader was attempting a buy and hold strategy, there would have been virtually no returns over this 5 year period. 

Components of the Philadelphia Semiconductor Index

Below are the 19 components of the SOX as of October 17, 2008:

    * Altera Corp.

    * Applied Materials, Inc.

    * Advanced Micro Devices

    * Broadcom Corporation

    * Freescale Semiconductor, Inc.

    * Infineon Technologies AG

    * Intel Corp.

    * KLA-Tencor Corp.

    * Linear Technology Corp.

    * Marvell Technology Group

    * Micron Technology, Inc.

    * Maxim Integrated Products, Inc.

    * National Semiconductor Corp.

    * Novellus Systems, Inc.

    * STMicroelectronics NV

    * Teradyne, Inc.

    * Taiwan Semiconductor Manufacturing

    * Texas Instruments, Inc.

    * Xilinx, Inc.