Infosys on Thursday announced plans to acquire InSemi, a company specializing in semiconductor design and embedded services, for an undisclosed sum.

The acquisition, set to be finalized in the current quarter, aims to enhance Infosys' engineering R&D expertise. The move is noteworthy given the crucial role  semiconductors play in advancing technologies such as artificial intelligence (AI), 5G, quantum technology, IoT, and smart devices.

"Over the last five years, InSemi has built a foundation with solid growth and design capabilities across the semiconductor value chain," the company said in a statement. "With Infosys as our catalyst, it creates a synergistic combination that allows us to scale and bring the power of AI & Engineering R&D and next-generation technology to global clients, expanding across industry sectors. We aim to further accelerate our progress, and together with Infosys, it paves a path of innovation opening new opportunities for our teams."

Dinesh R, executive vice president and co-delivery head at Infosys, said Infosys has consistently been a leader in providing advanced solutions across various sectors through its Engineering R&D services. 

Regulatory concerns, whether tied to China's reluctance to approve deals in light of US restrictions on China's ability to source semiconductors and a partial cap on equipment and more scrutiny of larger acquisitions, are minimizing mergers and acquisitions in the semiconductor industry, said Matt Bryson, a senior vice president of equity research at Wedbush Securities.

"I think the lack of mergers suggests it may be harder for large semiconductor vendors to grow, whether scaling or broadening portfolios through M&A beyond small tuck-ins, e.g., replicate an AVGO or MCHP type strategy, which would eventually result in a broader variety of SMID cap type semi names if this reality remains in place moving forward," Bryson said.

In 2021, three big deals took place in the semiconductor industry: Marvell bought Inphi for$10 billion in April; Analog Devices acquired Maxim Integrated for$20.8 billion in September; and Intel sold its SSD business to SK Hynix for$7 billion in December.

The industry saw even more significant moves in 2022. AMD bought Xilinx for almost$50 billion, setting a new record for semiconductor acquisitions. At the same time, Intel bought Tower Semiconductor for$5.4 billion.