ON Semiconductor (Nasdaq: ONNN) is on a spending spree. The analog chip designer recently closed the acquisition of Sanyo Semiconductor from Sanyo parent Panasonic (NYSE: PC) to improve its power-control portfolio and reach new markets in Japan, and then it signed an agreement to snag the CMOS image sensor division from Cypress Semiconductor (Nasdaq: CY).

Growth by acquisition is a fine strategy -- just ask Oracle (Nasdaq: ORCL) or Cisco Systems (Nasdaq: CSCO) if you want confirmation. But it only works when the acquisitions make sense and even then only if you're good at folding the new operations into your existing business.

In the case of the Cypress camera-chip deal, I think it's a smart move. ON's strength lies in industrial, medical, and military applications, and the Cypress unit serves many of the same markets. It should be a cinch to simply expand the product portfolio and customer list in lockstep, then start wringing inefficiencies out of the system and start to upsell customers on each list to products from the other operation.

The Sanyo acquisition makes less sense. Sanyo is a big consumer-products business, and its chip division is no different. The deal brings in a healthy $270 million or so in annual revenue that's supposed to be profitable on a non-GAAP basis right away. However, ON may be chasing cars here; the company doesn't necessarily know what to do with this new asset now that it's in hand.

My misgivings seem to echo what Wall Street analysts are seeing, which is a lot of Sanyo-related questions in need of an answer. ON's stock drifted down after the report despite fully satisfactory results (revenue up 17% year-over-year to $579 million with EPS of $0.22) and also an optimistic outlook for the coming quarter (revenue of $830 million to $875 million). Management didn't really answer all of the analysts' many questions about the Sanyo acquisition, and the market hates uncertainty.

Will ON surprise us all by figuring out how to run the Sanyo operations, or did the company pay $366 million for an asset it didn't really need? Add ON Semiconductor to your watchlist to keep an eye on the situation.