As this is the first 1999 issue of Challenge, we can hardly avoid commenting on 1998, which will not be remembered as one of the semiconductor industry's vintage years. The Asian economic crisis and continued excess capacity worldwide were among the major factors that contributed to maintaining the longest downturn the semiconductor industry has ever suffered.

However, ST and a handful of other chip manufacturers can look back on it with satisfaction.

Just as the 18th century is remembered as the Age of Enlightenment and the 19th century as the Industrial Age, so the 20th century will be remembered for the way that electronics grew from a scientific curiosity to become part of the fabric of daily life. From air travel to mobile phones, from heart pacemakers to computer games, little of our lives is unaffected by electronics and every year the importance of electronics increases.

Powering this revolution are the semiconductor manufacturers. In good years they make a fortune and in bad years they lose a fortune. Without them, however, entire industries would grind to a halt. As we approach the 21st century and the age of single-chip systems, tactical buying decisions are rapidly giving way to strategic partnership decisions and equipment manufacturers need to know that their chosen suppliers are not only healthy today but will still be healthy tomorrow.

For ST, 1998 will be remembered as a year in which the Company demonstrated its underlying strength. There are years in which it is hard not to grow and there are years in which only the strongest can grow and 1998 was without doubt in the second category. This issue of Challenge contains several articles that not only illustrate why ST has been able to ride waves that have engulfed many of its competitors, but also demonstrate its strength across the board, in areas as different as fuzzy logic, smartcards and satellite receiver chips.