After being technology laggards for most of this year, the iShares PHLX Semiconductor ETF (NasdaqGM: SOXX), which tracks the cap-weighted PHLX SOX Semiconductor Sector Index, and the Market Vectors Semiconductor ETF (NYSEArca: SMH) are starting to perk up.

Over the past two weeks, SMH is up 6.2% while SOXX is higher by nearly 8%. Both ETFs and other semiconductor funds have been buoyed by a spate of mergers and acquisitions activity in the chip industry. Over the past 12 months, semiconductor industry’s M&A activity totaled $78 billion, reports Josh Lipton for CNBC.

More recently, shares of Analog Devices (NasdaqGS: ADI) and Maxim Integrated Products (NasdaqGS: MXIM) are in merger talks after Fairchild Semiconductor International (NasdaqGS: FCS) and SanDisk (NasdaqGS: SNDK) hired banks to explore possible sale options.

“In my opinion, this sector represents an important pocket of energy that may play a role in defining how high the market can go from here. Because the semiconductor stocks were so beaten down earlier in the year, there is still a great deal of upside potential across the sector relative to other opportunities. Nevertheless, it also pays to respect how high this index has rallied from its lows and not get overly bullish after a sharp run up in price,” according to See It Market.

The semiconductor industry, though, faces some headwinds. Research firm Gartner anticipates that worldwide shipments of personal computers, tablets and smartphones will rise just 1.5 percent this year, which could cause chip sales to fall 1% in 2015. Additionally, Mark Hung, a research vice president at Gartner, also pointed out that manufacturing costs remain high for chipmakers. [Semiconductor ETFs Starting To Look Electric]