Of the part types I report on-analog, DSP and mixed-signal devices-it is the market-focused ones that will present some of the most interesting technology and business story lines this year. The hot markets to look at-for misses as well as for hits-are in communications, including wireless, ADSL and cable-modem parts. Home networking seems to be heating up. Disk-drive ICs and entertainment electronics (digital TV and audio) will give me some interesting stories, too.

While standard part types like data converters, op amps and power regulators will show sometimes dramatic improvements, these building blocks are becoming the new cores or intellectual properties for even more exciting circuits in the custom-parts arena. I would expect to see some business shifts among the major players according to the particular technologies they can develop or acquire from smaller companies.

I have a short list of small-to-middling outfits that possess outstanding mixed-signal know-how, but have yet to get themselves out of the financial doldrums. I can't speculate about takeover targets here. Nevertheless, I would look for some interesting market shifts as some of the cash-rich giants start vacuuming up niche suppliers to improve their own position.

Texas Instruments, for example, needs to upgrade its data-converter capability. It could do this by hastening its own development efforts, or by acquiring someone with strength in this area. TI embarrassingly lost 3Com business to Analog Devices over the ability to integrate A/Ds and D/As on a single chip with a DSP. By some estimates, ADI's Win-modem chip could account for 40 percent of 3Com's modem business this year. A high-speed, high-resolution, data-converter capability would also enable TI to compete more effectively against ADI, Alcatel and STM (Alcatel's manufacturing partner) in the burgeoning ADSL market.

National Semiconductor is doing better, now that its Cyrix microprocessors are effectively competing with Intel and AMD parts for PC CPU slots. It remains to be seen whether National's top management will continue to tout a mixed-signal system-on-chip capability, or reinforce this company's linear component capability.