Some wag, maybe Bob Newhart, said, "The secret of good comedy is timing." Regardless of whether you think this recession is at all amusing, "timing" is a big part of managing a cyclical business such as an ASIC company. A down cycle is the time for one strategy, and an up cycle is the time for another.

When the falling tide lowers all boats, the best you can hope to do is to grow market share within your sector and manage top-line revenue to maintain business momentum. This strategy has been the focus at Chip Express for almost two and a half years. We have also been working on new-product development and on market positioning via increased advertising spending and more Web and PR activity.

I commented in this section last year that the market would not rebound quickly, but would ramp slowly and surely into the next cycle. We believe that we can already see the beginning of the ramp. We're seeing signs that it's time for a more aggressive strategy, one more appropriate for a rising tide. We're gearing up for increasing design activity during the coming months.

Current market drivers, however, are different from those of the last up cycle, which was dominated by communications companies filling the need for customer premises equipment and carrier equipment to handle the exponential growth in Internet traffic.

From our perspective, the growth driver for new designs right now is the consumer product sector, and we're also seeing increased order volume from existing customers in PC peripherals and the military. The communications markets remain in the doldrums with little sign of improvement other than wireless LAN, a market to which we have some exposure through the PDA arena and which, in my view, is just getting started.

The leading indicator of the rising tide is increased inventory buys from customers on our top-ten account list, who are replacing inventory burned off during the recession. This is a particularly strong indicator for Chip Express because the fast-turn production nature of our structured ASICs allows customers to squeeze their lead times more than they would with a traditional ASIC vendor. The result of the inventory buys is a revenue increase of about 20 percent each quarter for the last six months and an overall increase in total backlog of about 25 percent. This is why we believe the ASIC industry is already in the early stages of a ramp.

My prediction for the coming year is for a gradual ramp in the industry in general and slightly faster growth in structured ASICs. The faster growth in structured ASICs is due to the specific economics of the sector and due to technology advances since 2000 by Chip Express and by our competitors.