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The high-tech industry has been among the worst performers in 2011. The Powershares (NASDAQ:QQQ) Trust barely moved in the year, while the Utility Select Sector SPDR Fund (NYSEARCA:XLU) is up close to 20 percent, the Vanguard Health Care Index (NYSEARCA:VHT) is up close to 14 percent, and the iShares Barclays 20+ year TB Fund (NYSEARCA:TLT) is up close to 25 percent. Even bellwether high-tech companies like Google (NASDAQ:GOOG) are near flat for the year. What is in for 2012? Will the high-tech sector continue its lackluster performance or catch up and outperform this year's winners?

The answer to these questions depends on four trends that can make or break the industry:

1. The Reversal of Globalization. The ongoing European woes threaten to slow-down and even reverse globalization. Large multinational corporations like Toyota Motor Company (NYSE:TM), Honda (NYSE:HMC), GM (NYSE:GM), Ford (NYSE:F), Caterpillar (NYSE:CAT), Sony Corporation (NYSE:SNE), Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), Apple (NASDAQ:AAPL), Cisco Systems (NASDAQ:CSCO), and 3M (NYSE:MMM) that have been enjoying the benefits of globalization, now face the prospect of suffering the consequences of a slow-down or even reversal of globalization, such as rising transaction costs and diminished business opportunities.

2. The State of the World Economy. The reversal of globalization is further expected to slow down the world economy, especially Europe which is already sliding into a recession. A slow down in the world economy will take its toll on high-tech spending, especially for discretionary items like Apple’s iPad.

3. Intensification of Competition. The high-tech industry is a highly competitive industry, especially when it comes to mature products like PCs and servers crowded with many players. In its recent earnings report, Oracle (NYSE:ORCL), for instance, reported that hardware sales dropped 10 percent, due to competition from IBM (NYSE:IBM), HP (NYSE:HPQ), and Dell (NASDAQ:DELL). The high-tech further suffers from economic obsoleteness, the rapid erosion of economic value of new products that undermines pricing power and profitability.

4. Mergers and Acquisitions (M&A). With interest rates remaining at record low levels, and high tech valuation at historically low levels, the high-tech industry is ripe for a wave of acquisitions that may enhance shareholder value. The industry, however, has to overcome the patent wars that ravage its mobile communications segment and cope with a pro-active Justice Department that tends to side more with consumer rather than with corporations.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.