At the beginning of this decade a writer for a powerful newspaper told me that, come hell or high water, she wasn’t giving up print—no matter how important online got to be. I had to think about that for awhile before answering, “It may not be your choice.”

That newspaper is now a shadow of what it once was, but the statement keeps reminding me of some of the brash claims being made by electronics companies today. No matter how brilliant an idea seems on paper, it can be a colossal flop for unanticipated reasons. And no matter how idiotic something may look to established players, you always have to take it seriously. Who would have thought 20 years ago that you could sell a cup of coffee for nearly $4?

Intel’s entry into all markets doesn’t mean it will succeed in those markets. Likewise, just because the market leaders it is challenging now have dominance in those markets, it doesn’t mean they’ll keep it. IBM invented the PC and lost the market to lower-priced competitors. Apple didn’t invent the MP3 player, but it now owns the market, while its share of the PC market remains small.

What’s getting interesting in the electronics world, though is that battles are no longer being fought by one company anymore. They’re being fought by ecosystems, and how those ecosystems fare against each other is unknown. To some extent it depends on how committed they are to each other. Is this like NATO or is it like the Allies in World War II?

Second, it is uncertain what will win out in technology. Will growth come at the low-end of the consumer market, or will there be enough growth at the high end to sustain more expensive development. To some extent, that depends on how fast developing markets mature and what their consumers are willing to buy, as well as how fast more mature markets recover from a very long and deep downturn.

And finally, it all depends on what sort of business context can be built around all of this. Apple’s genius in the MP3 world was iTunes. What that will be in netbooks, mobile Internet devices, set-top boxes and a variety of new form factors is unknown. And no matter how much money is thrown at solving the unknown, the results may still be unpredictable.

–Ed Sperling

Recoveries are measured in dollars, not in jobs. This one—and even the last recovery in 2003—will produce far fewer full-time jobs in the short run than past recoveries.

That doesn’t mean companies won’t hire great numbers of workers. But much of that will be contract labor. The trend is to not hire full timers until it’s hard to get enough qualified people to do contract work because they’ve all been snapped up by their competitors. That scenario could take several years to unfold.

For the semiconductor industry, this is the latest wrinkle in a sector that is largely built on boom-bust cycles. It took giants like Avnet and Flextronics to sort through the supply chain and make sure there weren’t huge inventory fluctuations caused by double and triple ordering. In fact, if you compare the inventory levels of the 2001 downturn with the 2007 downturn, they were much, much higher in 2001. It wasn’t inventory problems that prolonged this recession. It was a global meltdown and end user demand. Inventory has been under tight control.

Labor, however, was stacked up in 2007 the way inventory was in 2001. There was far too much infrastructure—even in places like China, where the unemployment rate rose significantly. And there simply wasn’t enough demand for goods to sustain those jobs.

From there, it looked like something out of a Quentin Tarantino movie. The axe-people went on a rampage. They’re still swinging, and they’re likely to keep swinging until they run out of people and get thrown out themselves. At that point, companies will begin rebuilding morale and insist this is a new beginning. It isn’t. And for the foreseeable future, until they get their costs under control, most companies will tap the wealth of expertise available in the market on a contract basis. It’s cheaper. You don’t have to pay benefits to contractors, and you can cut them without a severance package if there’s even the slightest blip in demand.

That works just fine when labor is plentiful and jobs are scarce. But as business picks up, the number of contractors who are up to speed on the latest technology, tools and challenges goes down. That means the longer companies wait, the more they have to invest in training when they do come on board. In addition, they also have to pay more in salaries when competition heats up.

In the semiconductor industry, companies used to rely on young graduates to fill in the ranks. They were cheaper and generally well trained. That option is disappearing, however. There will be fewer young graduates coming out of engineering schools in the future. Enrollment is down everywhere. Moreover, no matter how many H1-B visas are issued, employers in other countries are offering similar pay and benefits, when you take into account the cost of living and quality of life.

As if that wasn’t enough, the mass retirement of baby boomers is just beginning. Assuming they didn’t invest their money with Bernie Madoff, a recovery in the stock market will likely mean a recovery of their retirement income. And that will mean fewer qualified engineers across the board.

All of this will take a few years to sort itself out, of course. But by that time, companies may find themselves in a rather bad position—too few contract workers, too few full-time workers, no options for replenishing their ranks and wondering where the next competitive sideswipe will come from.

–Ed Sperling

The acquisition of Chartered by a wholly owned subsidiary of the Abu Dhabi government may sound like a rather brash investment, but our sources say it’s all part of a rather audacious plan that began unfolding one day after the deal to jointly run AMD’s foundry was hatched.

In fact, this is anything but an impulsive buy by a country swimming in oil profits. The plan is actually to integrate two foundries that weren’t quite first-tier—but which also were significantly more successful than second-tier players—to create a mammoth and sophisticated first-tier competitor with deep pockets and broad capabilities.

Chartered has always pulled its weight in the Common Platform development, but it’s hard to gain much attention when your partners are IBM and Samsung and the top competitor is TSMC. And AMD’s role in advanced technology development inside of IBM’s ecosystem has been quite impressive, while its foundry operation has been a drag on profits. AMD simply doesn’t have the resources that Intel does, and owning its own fab is getting to the point where…well…you have to be Intel to still afford it.

By combining the advanced capabilities of AMD’s new fab outside of Albany, N.Y., and the process expertise that Chartered has picked up working with the Common Platform, this could well prove to be an effective combination. Both AMD and Chartered have a strong tie into the IBM ecosystem, and both now have the capital to sustain the investment needed to make a foundry business successful.

But foundries typically are a starting point for government investment, too. China’s investment in SMIC, Taiwan’s support of TSMC, and even Singapore’s support for Chartered are all starting points. The real money is in the business that can be built above the chips, which means lots of investment in tools, engineering talent, schooling and more jobs. It also ultimately means a bigger market and potentially new sources of competition.

But that’s getting ahead of the story. Backing up to the more immediate news—the acquisition of Chartered—you have to wonder just how many facets and how deep the plan by the Abu Dhabi government actually runs. Our guess is this is just phase one.

–Ed Sperling