No matter how bleak the current market conditions seem, there will continue to be a semiconductor market, and it will grow in the future. That concept needs to be the guiding principle for companies as they manage their business during these challenging times.

Near term, companies need to react to the market realities, sizing their output and spending to match current sales forecasts. But times like this offer great opportunities for financially strong companies that are in strong markets.

The current market conditions will put significant pressure on small and emerging companies that have little innovation and rely on copying products that already exist in the market, as well as those that use price only to gain market share. Such companies will be most affected and will likely fail. That will help to stabilize prices in these difficult times.

Our customers may reduce their production output during tough times, but they will continue to invest in new products and new product development. Innovation will return growth to the semiconductor market, specifically to analog. Now is the time to get new products out, to be first to market and to have products that target emerging growth markets.

Key growth markets of interest to Linear Technology include:

• Automotive. Right now, all automotive manufacturers are seeing sales declines, and are taking actions to reduce output and spending. But all have active programs in development that will greatly increase the electronics content of new cars. Indeed, they are forecasting that automotive electronics content will grow two- to threefold over the next few years. That means electronics sales will continue to grow, independently of the number of vehicles sold each year.

Every major automotive manufacturer in the world is working on hybrid vehicles, which will add even more electronic content in cars. We have already introduced products directed toward this market and have others in development. We have just introduced the LTC6802, a highly integrated battery stack monitor that eases the design of battery monitoring systems for hybrid electric vehicles, electric vehicles and battery backup systems. The device enables precise voltage monitoring of every cell in long strings of series-connected batteries.

• Green growth markets. Any products targeted toward energy conservation or energy harvesting will see growth opportunities and will be insulated from the current market conditions. Energy costs and environmental concerns, as well as the need to extend battery life for mobile devices, have resulted in a focus on power optimization for a range of applications. Our energy-efficient products let customers convert power more efficiently, consume less power and extend battery life. Our LED drivers enable low-power lighting for a range of applications, from cars and medical instruments to laptops and office lighting. Our efficient analog solutions will play a role in driving cleantech markets.

• Communications infrastructure. The proliferation of wireless systems continues to produce market opportunities for Linear Technology in products for wireless and network infrastructure. Our high-speed data converters and high-frequency products are designed into next-generation cellular basestations, and our Hot Swap and power-over-Ethernet products are proliferating in network systems.

• Industrial market. Although they are not expected to grow as fast as some other segments, industrial markets are somewhat more insulated from market swings. Linear's analog products are used in factory automation, industrial process control, medical gear, instrumentation and security.

Current market growth figures from World Semiconductor Trade Statistics show that the analog IC market, which is estimated at $37.6 billion for 2008, will grow to $40.7 billion by 2011. Since we expect Linear Technology to continue to outperform the market, I am optimistic for the long term.

Lothar Maier is CEO of Linear Technology Corp. (Milpitas, Calif.).