The phenomenal growth of the semiconductor industry has been made possible by our ability to deliver more functionality at a lower and lower cost, with a reduction in cost per function of approximately 25&percent; per year. Technology advancements have also enabled higher performance, lower operating voltages, and associated lower power consumption. Dimensional shrinks based on 248 nm lithography led the revolution in recent years. However, with the fundamental limit for optical lithography at about 1/3rdthe wavelength, the limits for 193 nm and 157 nm lithography are about 65 nm and 50 nm respectively. With EUV and most other NGL technologies 7 years in the future the limit for the remainder of the decade is about 50 nm. Technology challenges, whether they are lithographic in nature or based on needed new materials with advanced properties, are summarized in this paper along with suggestions for potential solutions for the remainder of the decade. Even if we meet the technology challenges, continued revenue growth and profitability will become more and more challenging. The need for larger and larger technology R&D budgets may make it difficult for the current number of semiconductor manufactures and equipment and materials suppliers to remain profitable. The solution to this conundrum is now clear — partnerships and collaboration. Meeting this challenge of creative cooperation with existing and new partnerships is the new paradigm that is discussed here in some in detail. © 2003 American Institute of Physics