The Philadelphia Semiconductor Index, known by its ticker SOX, tracks the 30 largest companies listed in the United States that design, manufacture or sell semiconductors.
It was launched on 1 December 1993 by the Philadelphia Stock Exchange, which Nasdaq bought in 2008, and has become the most widely watched barometer of the global chip cycle.
What is in it
The index includes the biggest names in chips: Nvidia, Broadcom, Micron, Intel, AMD and TSMC, the Taiwanese contract manufacturer that makes chips for most of the industry.
Foreign companies can qualify through a US listing or an American depositary receipt (ADR), which is a share in a foreign company traded on a US exchange.
How it is weighted
The SOX is not a simple ranking by size, because the largest companies would otherwise dominate it entirely.
Instead, a cap system limits how much weight any single company can carry: the largest is capped at 12%, the second at 10%, the third at 8%, and every other member at 4%.
Nvidia, which would account for a quarter of the index if uncapped, is held to around 11%, while TSMC, whose ADR represents only a fraction of its full market value, carries about 4%.
The caps are reset every quarter, in March, June, September and December, and membership is reviewed once a year in September.
Real-time gauge
The SOX is the closest thing financial markets have to a real-time gauge of global technology investment, because semiconductor demand leads the broader economy by several months.
When companies order more chips, it usually means they are expanding capacity, launching new products or betting on stronger consumer demand ahead.
When they cut orders, the reverse is often true.
The index has taken on a new role in recent years as the primary measure of confidence in artificial intelligence spending, since AI systems require vast quantities of chips to build and run.
It rose 78% in the first nine months of 2026 alone, reflecting enormous investor expectations for AI infrastructure buildout.
That also makes it volatile: it fell more than 20% in a single month in July 2026 and dropped 11% across the third quarter, even as the year-to-date gain remained large.
Asia follows the SOX
Because the US market closes before Asian markets open, investors in Seoul, Tokyo and Taipei routinely use the previous night's SOX movement as a guide for how to open.
South Korea's Kospi and Taiwan's Taiex both fell sharply on Tuesday 13 October after the SOX dropped 2.67% the previous evening, a pattern that repeats regularly.
Micron, the largest US memory chipmaker, is the third-biggest member of the SOX with a weighting of about 8%.
That makes the index unusually sensitive to memory chip sentiment, and when memory stocks move sharply, as they did this week, the SOX amplifies the signal across the wider market.
