On the one hand, it's dangerous to enter the "fear itself" mind-set that many out-of-work engineers around Silicon Valley seem to be immersed in these days. Yes, many people are in danger of losing their homes in early 2003, and that's no laughing matter. Still, unabashed pessimism could cause us to lose sight of several wireless and serial-interconnect markets where signs of rebound can be seen on the horizon.

On the other hand, looking at the cover article on research-and-development trends in the September issue of IEEE Spectrum, I realize that many good companies have lost sight of Judy Estrin's famous warning to avoid eating the seed corn. Estrin's former employer, Cisco Systems, is trying to keep R&D funding at reasonable levels, as are JDS Uniphase, LSI Logic and Sun Microsystems. But the deep cuts in R&D at Lucent, Nortel, Agere and Broadcom represent a disturbing trend. Yes, these companies must cut burn rates on all fronts. But once the R&D and core technology platforms are sacrificed, can a company avoid a downward spiral?

It is perhaps inevitable that hundreds of startups in both network equipment and semiconductor categories will go out of business during the fourth quarter of this year and the first half of next. Some large, longstanding and wonderful companies may head to oblivion along with them. Perhaps some of them won't be able to avoid the trap of trying to please shareholders by cutting further than basic, sustainable survival levels. But once the baseline of R&D and core technologies is slashed in the name of efficiency, it may be impossible to cover. The bell is tolling for many of thee this fall.