NEW YORK (TheStreet) -- Wednesday night Qualcomm (QCOM) - Get QUALCOMM Incorporated Report revealed that its Snapdragon's processors had been "designed out" of Samsung's (SSNLF) new flagship phone. Analysts now believe Samsung is likely to use its own internal semiconductor solution, Exynos. This is just one example of the consolidation taking place in the semiconductor industry as vendors and their customers work to keep their operating costs as low as possible.

Nonetheless, there is still money to be made on these stocks, say analysts.

"We're pretty bullish on the semiconductor sector overall because it's the one tech sector where you can strongly argue the barriers to entry are going up," says John Pitzer, semiconductor analyst at Credit Suisse. "The [equities] market proves this out. There are semiconductor M&A plays taking place rather than IPOs because it's a lot cheaper to buy than build the technology."

Semiconductor companies have become cash cows, with top-line growth rates of 5% to 7% a year, and free cash flow of 7% to 9%, Christopher Rolland, FBR's senior semiconductor analyst tells TheStreet. By comparison, many software-as-a-service, security or big data companies may not have any free cash flow at all.

RF, or radio frequency, and memory chips are the preferred was to play smartphone volume growth, says Pitzer. Both chip sets are seeing content growth per phone as well as unit growth. He rates Avago Technologies (AVGO) - Get Broadcom Inc. Report , Micron (MU) - Get Micron Technology, Inc. (MU) Report and Sandisk (SNDK) as outperforms.

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In the PCs and servers businesses, Intel (INTC) - Get Intel Corporation (INTC) Report dominates the semiconductor market with its Xeon server processor. Intel owns almost 100% of the market globally, according to Rolland. He adds that ARM (ARMH) could be a challenger down the road. Rolland has a buy rating on both of these stocks.

A big driver of this growth is sales to hyper-scale technology companies that are building their own data centers, such as Facebook (FB) - Get Facebook, Inc. Class A Report , Google (GOOG) - Get Alphabet Inc. Class C Report , Amazon (AMZN) - Get Amazon.com, Inc. Report and Microsoft  (MSFT) - Get Microsoft Corporation (MSFT) Report . These data centers are powered by server processors from Intel, networking chips from Broadcomundefined , and memory from Micron and Sandisk.

Rolland has a buy rating on Intel and Broadcom.

"The silicon that is now going into automobiles, computer networks and the Internet of Things, where big data analysis makes monetization of data easier, is what will drive sales growth going forward," concludes Credit Suisse's Pitzer.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.