Business Week reports that tech companies have continued to invest unprecedented amounts in research and development even though demand has been stagnant until recently.

COST IS KEY. The payoff could be big for both chip companies and their consumer-electronics customers. To help them lower prices and spur sales, companies such as Sony (SNE ) are counting on the traditional price reductions of about 25% a year for most chips -- and bargaining hard with suppliers when they don't get more.