Such collaboration is driven partly by the tough economy — "We're all working together because we have no choice," Rodgers said — but it's also Cypress' newfound strategy of pursuing particular markets, rather than developing particular types of chips.

Rodgers said his company's strategy today is a stark contrast to the model pursued by Cypress, Intel Corp., and the rest of Silicon Valley circa 1983, when technology was king. Semiconductor companies then specialized in a technology such as CMOS and used it to build whatever they could. The '90s reversed that attitude as companies focused on particular product lines, targeting certain types of chips and building them with whatever technology they could find.

What's triggered the latest change for Cypress and others is a desire to move up the food chain, to be less of an off-the-shelf supply house and more of a participant in board- and system-level markets, Rodgers said.

So, in 2000, Cypress began the painful transition toward a market-focused strategy, in which the company picks a specific target such as storage-area networks and embarks on a quest to build or acquire all the parts necessary for that market.

The key to this strategy lies in partnerships with systems vendors, Rodgers said. The benefits run both ways: chip vendors get ideas and intellectual property they otherwise wouldn't discover, and an OEM gets a chip tailor-made for its application, and one that doesn't have to be qualified, because it was built with the OEM's system in mind. Moreover, partnerships allow OEMs to use chip vendors' engineering teams "for free," Rodgers said.

Rodgers rattled off more than half a dozen examples of notable products that Cypress has developed with partners such as Nortel Networks, Cisco Systems Inc., and Lucent Technologies Inc. Each case originated with a request from a Cypress customer. One part, for example, began as a four-port SRAM but mutated in response to EMC Corp.'s requests. "They wanted fast switching with data buffering, and we didn't know what that meant until they helped us understand it," Rodgers said.

Such partnerships also get complex chips into the hands of OEMs more quickly: "By working with us up front, you get to be on Moore's Law," Rodgers told the systems designers in the audience. That's true even if the chip gets sold to other OEMs, he said. Yes, it means other OEMs get to use the same technology, but their systems could hit the market a full year later.

Similar partnerships have helped Cypress, still a PC-centric company as late as 1999, develop a base of networking knowledge deep enough to provide entire line cards to Cisco, Lucent and Huawei Technologies Co. Ltd., Rodgers said.

Ray of hope

Rodgers prefaced his speech with the obligatory charts portraying the state of the economy, where he pointed out some hopeful signs that a semiconductor recovery could start within a few quarters. Semiconductor demand and usage have been climbing for the last two quarters, with capital expenditures flat among chip vendors, Rodgers said.

"So we're a couple quarters away from actually having demand catch up with capacity, and when that happens, I'm happy to tell you , I can charge you more for the products we make," he said.