Investment Themes 2025: Semiconductors & Networking
Technology investments are being dominated by the buildout of computationally hungry artificial intelligence (AI) infrastructure. Some companies in the sector have become household names, however, others remain largely unknown.
AI models are enabling rapid advances in technologies, such as enabling self-driving vehicle technology, predictive healthcare analytics and internet enhancements such as ChatGPT and Microsoft Co-pilot. These technologies are being ingrained in everyday life for many people and will increasing become the norm within a short space of time.
The opportunity for semiconductor manufacturers & networking companies arises out of the complexity of the AI buildout and the increasingly rapid rate of improvement of AI models and related technology.
We believe it is beneficial to invest along the value chain focusing not only on the big flashy names, but also those who offer opportunity in their specialised fields.
Chiefly, semiconductors (commonly known as chips) which enable the processing of data, are becoming increasingly complex and will continue to grow alongside the complexity of AI models, and as more enterprises adopt AI.
Networking (connectivity) has also emerged as a strategic area as a complement to semiconductor manufacturing and design.
InfiniBand networking technology has emerged as the leader and preferred connectivity technology for data centres, a type of technology which is currently dominated by Nvidia.
As the chart demonstrates, AI networking is forecast to be a $12bn USD market by 2028), with a large portion of this value attributed to InfiniBand.
The market is not immune from disruptive innovation. The release of the low-cost DeepSeek R1 model out of China, has caused some speed wobbles for the incumbent players and we remain alert to these developments.
However, the continuing buildout of AI architecture and rate of adoption enables Semiconductors & Networking to remain a core investment theme, considering the structural and persistent nature of this technological development.
This component within our broader investment strategy means that the portfolios continue to be positioned for future growth.
