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Driving a recovery

“We have nothing to fear, but fear itself.” Those famous words, spoken at a previous time of economic peril, ushered in the then new Democratic presidency of Franklin Delano Roosevelt, elected on a bandwagon of change and hope for the United States. And indeed, FDR's New Deal package of economic reforms and vast public works did deliver a much needed stimulus for the USA in the dark days of the Depression in the 1930's.

Today, Barack Obama faces a similar weight of expectation, the hope that he – and his presidential team ” can reinvigorate the world's largest economy. Meantime, the rest of the global economy holds its breath, because as the old saying goes 'when America catches a cold the rest of the world sneezes.' Trouble is, with each passing day, this 'cold' is looking more serious, more malignant for almost every developed country and its industry.

The electronics sector is no exception. Sony scythes through its staff; Nokia takes 'headcount reduction' measures; analog suppliers that count the consumer as a key end market, including the likes of National Semiconductor and TI, see orders drying up. Organisations whose job is to forecast what's going to happen in the forthcoming quarters say they have limited visibility – some give up and admit they haven't the remotest clue of what's going to happen next. They're not alone. These headlines are something we are all just going to have to get used to, as more people from Brussels to Bankok, think twice about buying an icecream, let alone an iPhone.

So, what to do? Well Obama may well be taking a leaf out of FDR's policy notebook, but in one sense, his task is much, much more difficult than that faced by his illustrious predecessor in the 1930's. Back then, any government led stimulus package could rely on plentiful, local supplies of energy in the form of crude oil to fuel it. Fast forward to January 2009 and that's simply not the case, with the IEA forecasting a global crude oil depletion rate of 9% in 2008 and US domestic production having peaked way back in 1970. Obama's America is going to have to compete with China, Russia and the EU to secure its energy supplies from overseas and it isn't going to be cheap, or pretty.

But within this problem lies a solution. The vast army of US consumers that has driven the world economy hasn't stopped, but many have simply begun to question what they really need. And how this industry deals with the next few quarters has important ramifications on how the world at large will cope with the current reality check and an adjustment to what it also needs.

Speaking about National Semiconductor's second quarter fiscal 2009 results (published on 8th December), Brian Halla mentioned the next megatrends; the things that are going to get people consuming again. National is concentrating on power efficient circuits and systems, such as its recently announced SolarMagic technology, which maximises solar power efficiency. Says Halla: “So National's strategy is to drive our own recovery by being early in building solutions to support the needs of the new mega trends. This is not a hunker down recession. It is time for our industry to drive its own recovery.”

Clearly, when it comes to these megatrends, green energy and efficiency are also high up the Obama presidency's agenda, whether it's fuel cells, tidal barrages, wind turbines or getting Detroit to produce a hybrid to out Prius THAT Toyota.

Solving these real world problems presents the electronics industry with a huge opportunity to deliver solutions for the USA and other nations, right where the rubber meets the road. So where FDR had cheap oil as the answer, Obama needs to pin his hope on IP and R&D. For the electronics industry, this means getting over short-term fears and enthusing the people that will drive any kind of recovery – making a commitment to its engineers.

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