"If winter comes, can spring be far behind?" wrote the English poet Percy Shelley. There are many semiconductor executives who might well answer "who knows?" to that question. For the world semiconductor industry, 1997 has been a disappointing year. For the first time in the industry's 40+ year history, Average Selling Prices declined for two successive years, with the result that instead of bouncing back after the slump of 1996 as it did after the slumps of 1975 and 1985, the world market has grown only a modest 5%.

The above text was taken from the Editorial Notes of Challenge one year ago and, twelve months later, the semiconductor industry is still anxiously waiting for signs of a thaw in its longest ever winter. The increase in demand has been outweighed by even lower ASPs with the result that the world semiconductor market is smaller now than it was a year ago.

The consequences have been obvious throughout the year, with many world-renowned companies cancelling new fabs, closing down existing fabs and even questioning their continued participation in the industry.

ST is one of the few semiconductor manufacturers that will be able to look back on 1998 with some degree of satisfaction. Its revenues actually grew in a year when the world market shrank significantly but also because the tough market conditions underlined the correctness of ST's long-term strategies, including an uncompromising commitment to R&D and new product development.

When spring finally comes, it will be powered by dynamic emerging applications such as car multimedia, information appliances and wireless communication that depend on semiconductor manufacturers who can deliver true system-on-chip technology: not only the technological capability to manufacture single-chip systems, but equally, the ability to operate successfully in an industry where the rules of the game are changing rapidly.

This edition of Challenge includes several articles that illustrate why ST will continue to grow through good times and bad. For example, many emerging applications hinge on the availability of ultra-low cost PC functionality and we report in this issue on the thinking behind ST's ground-breaking single-chip PC family. Also included in this issue is an interview with ST Vice President Andrea Cuomo on the forces shaping the emergence of car multimedia.