Computer and Electronic Product Manufacturing

Industry Overview
The computer and electronic product manufacturing industry produces computers, computer-related products, including printers, communications equipment, and home electronic equipment, as well as a wide range of goods used for both commercial and military purposes. In addition, many electronics products or components are incorporated into other industries' products, such as cars, toys, and appliances.

Products manufactured in this industry include computers and computer storage devices, such as DVD drives, and computer peripheral equipment, such as printers and scanners; communications equipment -- wireless telephones and telephone switching equipment; consumer electronics, such as televisions and audio equipment; and military electronics, -- for example, radar, communications equipment, guidance for electronic navigation equipment. The industry includes the manufacture of integrated circuits - or semiconductor "chips," -- which constitute the heart of computers and many other advanced electronic products. Two of the most significant types of computer chips are microprocessors, which make up the central-processing system of computers, and memory chips, which store information. Microprocessors are not only confined to computer systems, but they are embedded into most state-of-the-art consumer products. For example, late model automobiles can contain as many as 50 or more microprocessors that control ignition, shifting of the automatic transmission, anti-lock brakes, ride stability, airbags, the entertainment systems, displays, etc. Hybrid automobiles contain even more sophisticated integrated circuits for ride control and fuel efficiency. Technological innovation characterizes this industry more than most others and, in fact, drives much of the industry's production. Many new products, such as digital cameras and hand-held devices that permit wireless Internet access, reflect a convergence of technologies.

The computer and electronic product manufacturing industry differs from other manufacturing industries in that production workers account for a much lower proportion of all workers. The unusually rapid pace of innovation and technological advancement requires a high proportion of engineers, engineering technicians, and other highly technical workers to continually develop and produce new products. Likewise, the importance of promoting and selling the products manufactured by the various segments of industry requires knowledgeable marketing and sales workers. American companies manufacture and assemble many products abroad, because of lower production costs and new trade agreements.

Companies producing intermediate components and finished goods frequently locate near each other, because doing so allows easier access to recent innovations. Electronic products contain many components -- and sometimes even major parts, such as integrated circuits -- that often are purchased from other manufacturers. As a result of having the skilled workforce that fosters product improvement, some areas of the country have become centers of the electronics industry. The most prominent of these centers is Silicon Valley, a concentration of integrated circuit, software, and computer firms in California's Santa Clara Valley, near San Jose; however, there are electronics-manufacturing plants throughout the country.

To a large extent, electronics manufacturing has become truly global, and it is difficult to characterize many companies and their products as American or foreign. The movement of foreign companies to manufacture some goods in the United States does not change the fact that many products are being designed in one country, manufactured in another, and assembled in a third. Highly sensitive and sophisticated products such as semiconductors and computers are being designed and tested in the United States, for example, but it remains likely that other parts of final products, such as the keyboards and outer casings, are made somewhere else and shipped to yet another site for final assembly.

Although some of the companies in this industry are very large, most are small. The history of innovation in the industry explains the startup of many small firms. Some companies are involved in design or research and development (R&D), whereas others may simply manufacture components, such as computer chips, under contract for others. Often, an engineer or a physicist will have an innovative idea and set up a new company to develop the associated product. Although electronic products can be quite sophisticated, it has been possible to manufacture many electronic products or components (not necessarily finished products) with a relatively small investment. Furthermore, investors often are willing to put their money behind new companies in this industry because of the history of large paybacks from some successful companies. Success always will depend on innovation, and although investment costs are rising, there should continue to be opportunities to develop good ideas.

The rapid pace of innovation in electronics technology makes for a constant demand for newer and faster products and applications. This demand puts a greater emphasis on R&D than is typical in most manufacturing operations. Being the first firm to market a new or better product can mean success for both the product and the firm. Even for many relatively commonplace items, R&D continues to result in better, cheaper products with more desirable features. For example, a company that develops a new kind of computer chip to be used in many brands of computers can earn millions of dollars in sales until a competitor is able to copy the technology or develop a better chip. Many employees, therefore, are research scientists, engineers, and technicians whose job it is to continually develop and improve products.

The product design process includes not only the initial design, but also development work, which ensures that the product functions properly and can be manufactured as inexpensively as possible. When a product is manufactured, the components are assembled, usually by soldering them to a printed circuit board by means of automated equipment. Hand assembly of small parts requires both good eyesight and coordination, but because of the cost and precision involved, assembly and packaging are becoming highly automated.

Working Environment 
In general, those working in computer and electronics manufacturing -- even production workers -- enjoy relatively good working conditions. In contrast to those in many other manufacturing industries, production workers in this industry usually work in clean and relatively noise-free environments. Computer chips are manufactured in "clean rooms," in which the air is filtered and workers wear special garments to prevent any dust from getting into the air. A speck of dust will ruin a computer chip.

In 2003, the rate of work-related injuries and illnesses per 100 full-time workers was 2.4 in the computer and electronic parts manufacturing industry, lower than the average of 5.0 for the private sector. However, some jobs in the industry may present risks. For example, some workers who fabricate integrated circuits and other components may be exposed to hazardous chemicals, and working with small parts may cause eyestrain.

About half of all employees work regular 40-hour weeks, but pressure to develop new products ahead of competitors may result in some R&D personnel working extensive overtime to meet deadlines. The competitive nature of the industry makes for an exciting, but sometimes stressful, work environment -- especially for those in technical and managerial occupations.

Employment
The computer and electronic product manufacturing industry employed 1.3 million wage and salary workers in 2006. Few workers were self-employed.

The industry comprised about 19,000 establishments in 2006, many of which were small, employing only 1 or a few workers. Large establishments of 100 or more workers employed the majority -- 78 percent -- of the industry's workforce.

Degree Paths into this Industry
Given the importance of R&D to the industry, it is not surprising that a large proportion -- about 1 in 3 -- of all workers are in professional and related occupations. About 14 percent of those workers are engineers -- predominantly electrical and electronics engineers and computer hardware engineers, but also many industrial and mechanical engineers. These workers develop new products and devise better, more efficient production methods. Engineers may coordinate and lead teams developing new products. Others may work with customers to help them make the best use of the products. Computer systems analysts, database administrators, and computer scientists are employed throughout the industry, becoming more dispersed with the increasing computerization of development and production methods. Other professionals include mathematical and physical scientists, and technical writers.

About 6 percent of workers are engineering technicians, many of whom work closely with engineers. Engineering technicians help develop new products, work in production areas, and sometimes assist customers in installing, maintaining, and repairing equipment. They also may test new products or processes to make sure that everything works correctly.

Despite the relatively high proportion of professional and technical workers in electronics manufacturing, more than 3 out of 10 employees are production workers.

About 16 percent of workers in the industry are in management, business, and financial operations occupations. In this industry, top management is much more likely to have a technical background than are its counterparts in other industries. This is especially true in smaller companies, which often are founded by engineers, computer scientists, or other technical professionals.

About 14 percent of workers in the industry hold office and administrative support or sales and related jobs. Sales positions require technical knowledge and abilities; as a result, engineers and technicians often may find opportunities in sales or sales support.

Industry Forecast
Employment in the computer and electronic product manufacturing industry is expected to decline over the next decade, but there should still be favorable employment opportunities in certain segments of the industry.

Wage and salary employment in the computer and electronic product manufacturing industry is expected to decline by 12.0 percent between 2006 and 2016, compared with a projected increase of 11 percent in all industries. Although the output of this industry is projected to increase more rapidly than that of any other industry, employment will decline as a result of continued rapid productivity growth--the ability of the industry to produce more and better products with fewer employees. Employment also will be adversely affected by continued increases in imports of electronic and computer products, including intermediate products such as components and microchips. Although a great deal of the design work in this industry takes place in the U.S., much of the manufacturing process has been moved overseas.

The projected change in employment over the 2006-16 period varies by industry segment. Although demand for computers should remain relatively strong worldwide, employment is expected to decline 33.5 percent in computers and peripheral equipment and 13.7 percent in semiconductor and other electronic component manufacturing. Declines in both will be due to the introduction of new technology and automated manufacturing processes, as well as a slowdown in the growth of output in these segments from previously high levels. Further, these segments will continue to face strong foreign competition.

Employment in navigational, measuring, electromedical, and control instruments manufacturing is expected to decline relatively slowly at 4.5 percent due to heavy spending on military and health care electronics. Employment in audio and video equipment manufacturing is expected to decrease by 21.1 percent, due largely to continued import competition as well as improvements in productivity. Employment in communications equipment manufacturing is expected to increase by 0.4 percent despite automation and consolidation among firms in the industry. Employment in the manufacturing and reproduction of magnetic and optical media is expected to decrease by 3.7 percent, because of higher productivity and more efficient production processes.

There should be a smaller decrease in employment among professional and related occupations than among most other occupations in the computer and electronic product manufacturing industry. Despite large numbers of engineering graduates in many foreign countries, many American manufacturers prefer U.S.-based engineering teams because they are believed to have a better knowledge of the domestic market. However, the use of the Internet and other new forms of communication makes it possible for engineers to collaborate over great distances. At the same time, wages have been increasing rapidly among qualified engineers in developing countries. While offshore outsourcing of engineers will probably continue, there should be little danger to American workers, who report very low unemployment.

The computer and electronic product manufacturing industry is characterized by rapid technological advances and has grown faster than most other industries over the past several decades, although rising costs, imports, and the rapid pace of innovation continue to pose challenges. Certain segments of the industry and individual companies often experience problems. For example, the industry occasionally undergoes severe downturns, and individual companies--even those in segments of the industry doing well--can run into trouble because they have not kept up with the latest technological developments or because they have erred in deciding which products to manufacture. Such uncertainties can be expected to continue. In addition, the intensity of foreign competition and the future role of imports remain difficult to project. Import competition has wiped out major parts of the domestic consumer electronics industry, and future effects of such competition depend on trade policies and market forces. The industry is likely to continue to encounter strong competition from imported electronic goods and components from countries throughout Asia and Europe.

Because defense expenditures are expected to increase, sales of military electronics, an important segment of the industry, will likely pick up. Furthermore, firms producing electromedical equipment will continue to expand as new health care breakthroughs are made. Smaller, more powerful computer chips are constantly being developed and incorporated into an even wider array of products, and the semiconductor content of all electronic products will continue to increase. New opportunities will continue to be created by the growth of digital technology, artificial intelligence, and nanotechnology, as well as the expansion of the Internet and the increasing demand for global information networking.

Despite the overall projected decrease in employment, many employment opportunities should continue to arise in the industry due to the technological revolutions taking place in computers, semiconductors, and telecommunications, as well as the need to replace the many workers who leave the industry due to retirement or other reasons. Opportunities should be best in research and development. The products of this industry -- especially powerful computer chips -- will continue to enhance productivity in all areas of the economy.

Prospects are especially good for professional workers, such as engineers. Despite competition from abroad, U.S. companies prefer workers in research and development who have a strong understanding of the domestic marketplace. Although employment in the industry continues to decline, the relatively small number of engineers in the U.S. makes it very difficult for companies to find qualified workers when openings arise. Computer software engineers are also in high demand in this industry because many complicated hardware products will require software. This includes both drivers which help devices interface with computers and software that runs directly on complex devices.

Despite the rapid decline of production jobs, prospects should still be good for qualified workers, especially those with formal training in high-tech manufacturing. Although fewer positions are now available, changes in the nature of the work have meant that workers need to have a higher skill level than before. Many positions require a certificate or associate's degree from a technical school.

Related Degree Fields

• Computer Engineering
• Computer Science
• Electrical Engineers
• Engineering
• Engineering Technology
• Industrial Engineering
• Mechanical Engineering
• Software Engineering

Professional Associations/Resources

• American Electronics Association
• Electronic Industries Alliance

Note: Some resources in this section are provided by the US Department of Labor, Bureau of Labor Statistics.