The recent sell-off in technology shares in the US following Deepseek’s announcement that it had created an artificial intelligence (AI) model at a fraction of the cost of its US counterparts, presents compelling buying opportunities for investors, according to Annabelle Miller, principal at ECP Asset Management.

While investors were initially concerned this would lead to lower capital spending on advanced semiconductor devices, the long-term growth opportunity for leading semiconductor innovators remains intact.

"We believe the market has overreacted to the announcement from Chinese AI company, Deepseek. Big technology companies such as Amazon and Microsoft have historically seen that a decrease in the cost of technology components is actually positive for long-term adoption across a broader number of applications,” Ms Miller said.

Specific examples of companies positioned to benefit from the growth of AI applications include TSMC, ASM International and Advantest, according to Ms Miller.

"We remain confident in the long-term growth opportunity for companies innovating at the leading edge of semiconductors including TSMC, the suppliers of front-end equipment such as ASM International and back-end testing equipment, Advantest.

“The testing process is critical in the semiconductor manufacturing process as it is used to identify defective semiconductors. Semiconductor manufacturers view it as a critical process to ensure devices operate as designed, particularly in end applications with zero-defect tolerance such as automotives and medical devices. The testing process also helps to improve semiconductor yields. Improving yield is the most important factor in overall wafer processing costs as incremental increases in yield significantly reduce manufacturing costs," she said.

Ms Miller is also very upbeat on Dutch company ASM International (ASMI), which is a beneficiary of investments being made to develop cutting edge logic and memory semiconductors by the likes of TSMC, Intel and Samsung. “ASMI is the world’s market leader in atomic layer deposition (ALD) machines and epitaxy tools, which are essential for fabricating these semiconductor devices. The business is well positioned to benefit from the increasing capital expenditures of foundries on the back of greater complexity in semiconductor architectures as the industry looks to ways of bending ‘Moore’s Law’.

“We need more and more computer chips as we move to an increasingly digital world. Moore’s Law tells us that computer chips are constantly evolving, so new product is always being launched and advances are being made.

“ASMI's competitive advantage lies in their proprietary chemistry for deposition processes and customer loyalty, stemming from the high cost and time investment required to develop chemistry and layer processes,” she said.

“We believe that the economics of a business drives long-term investment returns. Investing in high quality growing businesses that have the ability to generate sustainable, above average economic returns will produce superior investment performance over the long-term. The semiconductor space continues to present compelling growth opportunities for investors for the long-term,” said Ms Miller.