The industry learned early in 2009 that it was no longer in control of its own destiny. Turmoil in the financial and real estate markets--sectors not directly related to electronics--shredded what many thought were reasonable growth assumptions; as the year progressed, demand fell 40 percent in semiconductors alone. As consumers and corporate IT equipment buyers clamped down on spending, electronics manufacturers idled up to 60 percent of their plant capacity and ferociously slashed jobs to reduce operating losses.

The economy will remain a focus in 2010. Most operating budgets, including capital spending; R&D investments; and sales, general and administrative costs, will be allotted with one eye trained on market opportunities and the other fixed on the economy.

The electronics industry has seen downturns before, but they were largely of its own making. The cyclical IC sector expanded and contracted every three to four years or so, fluctuating between inventory shortfalls and overproduction, but chip executives didn't have to look too far beyond their customers' business outlooks when planning their own strategies.

Sometimes they misread the signals and planned too conservatively or too lavishly, and their companies paid for those errors in judgment. But tech executives can hardly be blamed for the latest industry downturn. Going into 2009, inventories and manufacturing capacities were at reasonable levels across the sector, and operating costs were at what many thought were optimal levels.

The Great Recession blindsided just about everyone. Demand suddenly tanked across the industry as banks and other financial institutions pulled or restricted lines of credit, making it difficult for already skittish customers to finance electronics purchases. The larger economy insinuated itself into the tech industry, and it continues to edit the business plans of managers across the electronics supply chain.

It could have been worse. "The stimulus is working and has been a major contributor to the economy's turnaround," said Augustine Faucher, an economist with Moody's Economy.com (West Chester, Pa.). "Job losses would have been much more severe without the government's support. Yet a political problem remains; although the economy is expanding, it is still losing jobs."

That job loss is more than a "political" problem. Companies may remain reluctant to hire through the first half of 2010, until they confirm the economic turnaround is real and sustainable.

But deciding when to ramp up and rehire is a delicate dance. Spend too much time staring at the big, global economic picture, and you could miss the subtle signs of growth in your own neck of the woods. Wait too long for demand to return, and you could be caught unaware when it does, losing business to competitors who were better prepared.

See also:

Primed for growth, whenever it comes

Intel sets sights on new markets

GlobalFoundries takes on the world

The year the past caught up with Europe

For CEOs, uncertainty is guaranteed

Memory massacre of 2009

Along with wafers, foundries made mistakes

Economic turbulence roils Japan

Venture capital creeps toward the light

LEDs, smart grid lead green tech charge