Consolidation in the semiconductor sector has increased over the last few years, but that hasn't really caught our attention because the size of deals was small — so small, in fact, that the acquirers were not even required to furnish too many details.

There are several advantages to small deals: they have cheaper valuations, don't require too much cash outlay or disclosure and are easier to integrate.

Integration is a major issue for semiconductor players because it's not just a question of a culture match, but also the merging of product roadmaps including in some cases, manufacturing complexities (for example On Semiconductor's acquisition of AMIS Holdings took 4-5 years to integrate).

Many semiconductor companies also have manufacturing and other licensing arrangements with each other that serve as obstacles to acquisitions by competing firms.

Despite these difficulties, there is the lure of rounding out the portfolio without re-inventing the wheel, which could in any case prove expensive because engineers don't come cheap. Also, resultant synergies help expand into new geographies and markets.

So while the majority of the companies have been making small acquisitions (of design firms mostly), some like Broadcom have mastered the art (its CEO said last year that it acquired 50 firms over the last 10 years).

But the scope for these small acquisitions is on a decline. Here's why-