Many of the challenges facing the automotive industry in the 1990s will be the same as those facing the semiconductor industry. Intense worldwide competition will result in manufacturing overcapacity that reduces profitability. The global marketplace will bring emerging new markets, and suppliers will struggle to keep up with the changing consumer demographics. As manufacturers, we will be challenged to maintain capable workforces while developing products for a cleaner environment and higher functionality vehicles.Suppliers will face new challenges based on higher expectations from their customers. In the semiconductor industry, product quality approaching zero DPM will be expected and achievable, not only for the mature phase of production, but also for new product introductions. The latest in advanced semiconductor technology, long a key differentiator in the business, will become available at a price to any company wishing to enter the business. The most successful suppliers will have only a year or two advantage over their competitors. Customer service will be expected to reach new levels of performance as “just in time” systems are demanded and become a reality. Parts ordering systems will be tied into the customer's production scheduling systems. All of these--quality, technology and service--will be the prerequisites to doing business in the 1990s. Supplier differentiators will be: 1) the product features, capability and performance; 2) timeliness of product development and first-time manufacturability; and 3) the cost of the product. Simply put, a product that is better, faster and cheaper.Meeting all of the above expectations will be necessary but not sufficient to become a successful semiconductor supplier in the 1990s and beyond. For semiconductor suppliers to be successful, their customers must be successful. Customer/supplier relationships will reach new levels of commitment.Semiconductor suppliers, electronic system manufacturers and automakers will cooperate in setting key goals and working closely together to attain mutually beneficial world-class capabilities.This paper discusses an envisioned path for semiconductor suppliers to follow in order to provide timely, cost effective, differentiated products of high value to the ultimate customer--the automobile owner. It also discusses ways in which suppliers and customers can work together to be more successful in the competitive world of the 1990s and beyond.