Call it a chip wreck.
Despite the carnage, one veteran tech investor says the space is now flush with cheap buys.
"There's no question that near-term fundamentals are OK and valuations are deeply oversold," Paul Meeks, chief investment officer at Sloy, Dahl & Holst, said Friday on CNBC's "Trading Nation."
The SMH semiconductor ETF's sell-off brought its price-to-earnings ratio down below 14 times forward earnings, nearing the two-year low reached in April. By comparison, the XLK technology ETF trades at 17.6 times forward earnings.
Meeks, who in the late '90s ran the $3 billion Merrill Lynch Global Technology fund, sees two chip stocks to buy on the dip.
"That stock, since the deal has been thwarted by the Chinese regulators, is down to the high $80s, low $90s and I think that's a quality company that should be bought," Meeks said.
Qualcomm had offered $127.50 per share for NXP Semiconductor before China killed the deal in late July. NXP now trades 29 percent below that bid.
"Micron is the leading player in DRAM and NAND flash and the industry has been consolidating and Lam is a semiconductor capital equipment company that actually has, among its biggest customers, folks like Micron so they're tied at the hip," he explained.
NXP and Micron have been under pressure on fears the semiconductor industry's growth cycle is drawing to a close. Meeks agrees that chips are undergoing a cyclical slowdown, though he argues it won't be as destructive as in the past.
"We might be entering a down cycle in some of these businesses, but it is going to be more transitory than people think and it's also going to be less steep than people think," said Meeks.
High-growth markets such as artificial intelligence and big-data analytics could offset a slowdown in PC and smartphone demand, Meeks added.
"This cycle, yes it's turning downward again, [but] it'll be transitory and not so steep, and in the meantime, I think those stocks over the next couple of years when people realize this will go up 30, 40, 50 percent."
At least a 30 percent rally would take NXP Semiconductors back to $117, a level not seen since mid-June. A similar increase would push Micron to its June level of $61.