Applications of semiconductor nanocrystal in electronics are promising. Various techniques were developed to synthesize and analyze semiconductor nanocrystals for integrated circuit applications. In this study, silicon and germanium nanocrystals were synthesized in silicon dioxide matrix by magnetron sputtering deposition and following high temperature furnace annealing. Multilayer and single layer samples were prepared by co-sputtering depositions. Transmission electron microscopy measurements were carried out to analyze annealing effects on nanocrystal size distribution, change in shape, density and localization in silicon dioxide (SiO2). Ge-Ge Traverse Optical (TO) peak was monitored using Raman spectroscopy to investigate germanium nanocrystal formation and stress effects of silicon dioxide. Si-O-Si asymmetric stretching band is examined by Fourier transform infrared transmission spectroscopy to study silicon dioxide matrix recovery with germanium nanocrystal formation. Luminescence characteristics of silicon nanocrystals in visible and near infrared region (550nm-1050nm) with changing nanocrystal size and density were studied with photoluminescence spectroscopy.