There is an acquisition frenzy going on. Chip companies are eating up just about any little guy out there. Intel, Texas Instruments, and others are all shopping. Prices paid for these companies keeps rising. Intel alone has billions to spend in cash for startups.
Cisco seems to be buying a company a week at least.
It depends on the company. You have to look for new markets that are growing. Some markets like networking look like there is plenty of room for growth. Money managers are buying not just one company in some of these markets, but all the players, since they seem room for multiple players. Fund Manager Kevin Landis made a fortune over the past year buying just about every communications chip stock.