It's a fascinating time to be writing about the European electronics industry. After difficult times in the 1980s, Europe is looking like a runner who has gotten his second wind.

For the last 10 to 15 years, the semiconductor industry has been driven by the PC industry. The PC's home market was the United States, and the little machine was exported all around the world. The Japanese learned to compete. We Europeans just bought the PCs.

It was the PC that demanded high-performance microprocessors and yet could offer the volumes and could afford the margins to make Intel the world's leading semiconductor maker. The PC also demanded the DRAMs that pioneered submicron and then deep-submicron process technologies.

The extreme cost of developing those processes and building the wafer fabs to run them has been tough on many chip makers, but even DRAM vendors have been able to make money.

Well, now there's no doubt we are entering an off period. The history of the semiconductor market has been one of boom and bust, but now something fundamental is changing. The days of the PC as driver are drawing to a close. The basic PC functionality is being turned into a consumer item; a very thin-margin commodity. What we are seeing is part of the transition to a new order based around computing married to digital communication. European system companies are pioneering it, and this new era favors European semiconductor companies. Already, the digital mobile phone has achieved a significance similar to that of the PC. Finland, Nokia's home turf, leads the world with 40 percent penetration already.

After the mobile phone comes the third-generation mobile multimedia terminal. So-called 3G terminals will do much more than provide voice communications around the globe. They promise to eventually become pocket networked videoconferencing terminals and personal information managers. With first rollout scheduled for 2001 or so, the design starts are not far off. And they are likely to be the most demanding electronics application for the foreseeable future. Europe's three leading semiconductor makers, Philips, Siemens and STMicroelectronics, are all well-placed in these markets.

Where the PC era focused on the X86 and DRAM, the mobile-communications era will focus on ARM cores, other not-yet defined CPUs and flash memory. Add RF circuits to the mix, and it becomes apparent that the winners will be the ones that can put together a winning combination of all these technologies. Again, European semiconductor vendors are well-placed.

As I said, it's a fascinating time to be writing about European electronics.

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