The recovery is happening now. Supply and demand are settling into a predictable, albeit slower, pattern. Technology innovation is bringing new wireless infrastructures as well as voice, data and video networks to the mainstream. Consumer spending is on the rise. Nevertheless, embroiled in the day-to-day operations of the market, it can feel as if old rules don't apply.

Just as focusing on subatomic particles makes it difficult to see the big picture, looking at the market through a microscope leads to feelings of insecurity and confusion. By stepping back to view the recovery through a wide-angle lens, the defining characteristics of the current market recovery become crystal clear: Manufacturing is shifting to the Far East, the design culture is adapting to accommodate shrinking product development cycles, and the evolving supply chain is changing the competitive landscape.

Business is booming in the Far East, and China is becoming a central hub in manufacturing. In fact, it is predicted that the market segment share for Chinese mobile phone manufacturers will reach 60 percent during the next four years, up from 15 percent today. With original design manufacturers (ODMs) able to bring new systems to market faster and at lower price points than ever before, Western companies must make fundamental changes in the way they do business.

The 18-month product cycle is no longer relevant, considering that today's ODMs design products from start to manufacture in as little as nine months. The compressed ramp to production means tighter product development control as well as a greater emphasis on first-time success.

Silicon vendors must go beyond chip design, taking on system engineering to integrate more functionality in chip-scale solutions that are fully tested and production-ready.

The effects of this new design culture are not lost on the supply chain. Larger companies are adapting brand-marketing strategies and shedding production. The competitive landscape is changing, with a consolidation of companies supplying core chips, such as applications processors. The hefty price tag associated with smaller-geometry processes is squeezing startup companies out of the core chip market.

Capturing market segment share requires smaller companies to focus on the ancillary chips that function between the core chips and the outside world. In the wireless markets, for example, innovation is centered on the development of chip-scale multichip modules that interface core devices to the antenna.

Opportunity abounds from the new order of the supply chain. To be poised for success, executives and technologists must stand back and view the industry at a macro level. Long-term growth can be achieved by embracing the geographical shift in production to Asia, as well as the product development, sales, marketing and partnership strategies that support the ever-shrinking design cycle.

Jim Derbyshire, Chief Executive Officer, SiGe Semiconductor Inc., Ottawa