When a business or an industry is undergoing change in uncertain times, the best approach is to retest some fundamental beliefs about the industry's characteristics.

Our industry is more in a period of transition than it is undergoing a fundamental shift. Primarily, the industry has truly become global. Forecasts and actual results show that Asia is becoming the largest region in the world for semiconductor consumption. A rebalancing of outsourced manufacturing to new low-cost regions of the world is creating a geographical shift in consumption. Many predict the second wave will follow, as Asia, specifically China, becomes the largest opportunity for long-term growth.

For now, however, outsourcing is really the inflection point occurring in our industry today. Outsourcing of manufacturing is not new, but the global nature of that industry causes engineering design activities and fulfillment to be oceans apart. A transition of resources and work force is under way.

Companies must make a choice between making a strategic investment and outsourcing what they perceive to be the noncore piece. In short, the industry is maturing and consolidating. When all the dust settles from this latest transition, the fact is that the industry will remain a cyclical one. It is also an industry of great people, entrepreneurs and risk takers. As long as the risk taking and innovation continue, even the flight of production to China will not collapse an industry still driven by intellectual property and an uncanny ability to reinvent itself.

We are mired in the worst correction ever. This downturn includes the sharpest decline ever in PC unit demand along with the collapse of a relatively young data communications industry. Both of these industries continue to slowly recover. Unit shipments are rising, although the business is currently producing mixed results by region. When capacity is finally reached, it will have no boundaries.

The industry will recover with or without a "killer app" as the applications for electronic components continues to broaden. This recovery will most likely be characterized by modest but steady improvement, much like the early '90s. History says our predictions are rarely timely, much less accurate, particularly on the big swings. With that said, the economy now becomes the wild card.

As for distribution, it has always been a business in transition. With its brick-and-mortar model coupled with value-added services firmly intact, it too will recover, but remain challenging. The next up cycle will belong to the risk takers and the companies that diligently managed their strategy for the next market that, history has proven, repeats itself.