The contraction of the semiconductor industry continued with embedded chip and flash memory makers Cypress Semiconductor and Spansion announcing a merger plan worth $4 billion.

Both companies make flash memory and low-power circuits used in industrial equipment, medical instruments, smart devices and cars. For example, Spansion’s microcontroller units are used in automotive braking systems.

The merger makes sense with fast growth in the Internet of Things market, where industrial equipment with connectivity features could put the companies’ products in high demand, said Jim McGregor, principal analyst at Tirias Research.

The combined company could go after markets like industrial automation, smart cities and smart devices, McGregor said.

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