Nevertheless, Hung argues that more chipmakers are exploring consolidation as one way tackle the headwinds by scaling businesses, cutting costs and bolstering profit margins.

RBC’s Amit Daryanani believes the next likely acquisition targets in the space could be companies with relatively high gross margins with room for cost cutting on operating expenses, which include semiconductor companies like MXIM, Semtech Corp. (NasdaqGS: SMTC), (NasdaqGS:  POWI) and Cypress Semiconductor (NasdaqGS: CY).

XSD includes 2.2% SMTC, 2.4% POWI and 2.1% CY.

SPDR S&P Semiconductor ETF

For more information on the chipmakers, visit our semiconductors category.

Max Chen contributed to this article.