Computer and Electronic Product Manufacturing
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.
Goods and services. This industry differs somewhat from other manufacturing industries in that production workers make up a relatively small proportion of the workforce. Technological innovation characterizes this industry more than most others and, in fact, drives much of the industrys production. This unusually rapid pace of innovation and technological advancement requires a high proportion of engineers, engineering technicians, and other technical workers who carry out extensive research and development. Likewise, the importance of promoting and selling the products manufactured by the various segments of the industry requires knowledgeable marketing and sales workers. American companies in this industry manufacture and assemble many products abroad to take advantage of lower production costs and favorable regulatory environments.
Electronic products contain many intermediate components that are purchased from other manufacturers. Companies producing intermediate components and finished goods regularly choose to locate near each other, because doing so allows companies to receive new products more quickly and lower their inventory costs. It also facilitates joint research and development projects which benefit both companies. As a result of having the skilled workforce that fosters product improvement, several regions 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 Californias Santa Clara Valley, near San Jose. However, there are several other centers of the industry throughout the country.
Globalization has become a major factor in the electronics manufacturing industry, often making it difficult to distinguish between American and foreign companies. Many American companies are opening plants and development centers overseas and overseas companies are doing the same in the U.S. Many products are being designed in one country, manufactured in another, and assembled in a third. The U.S. electronics industry tends to be focused on high-end products, such as computers and microchips. Even so, many components of final products manufactured in the U.S. are produced elsewhere and shipped to an American plant for final assembly.
Although some of the companies in this industry are very large, most are relatively 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. Once developed, the company licenses a production company to produce the product, which is then sold by the original company. Although electronic products can be quite sophisticated, production methods are generally similar, making it possible to manufacture many electronic products or components 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.
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 equipmentwireless telephones and telephone switching equipment; consumer electronics, such as televisions and audio equipment; and military electronicsfor example, radar, communications equipment, guidance for smart bombs, and electronic navigation equipment. The industry also includes the manufacture of semiconductor productsbetter known as computer chips, or integrated circuitswhich are key components of computers and many other electronic products. Two of the most significant types of computer chips are microprocessors, which are the central processing units of computers, and memory chips, which store information.
Industry organization. The computer and electronic product manufacturing industry has many segments. Companies in the industry are generally classified by what they sell.
Computer and peripheral manufacturing is made up of a wide variety of companies that make computers and computer-related products. A relatively large number of companies build computers for home or business use. Most computers are built by a small number of well-known brands, but there are also many small companies that sell their products locally or on the Internet. Because computers are very complex products, they are made up of a wide range of components, such as motherboards, central processing units, graphics cards, hard disk drives, and power supplies. Although some computer manufacturers build some of these products themselves, many of these products are purchased from other companies and assembled as part of the computer. As a result, many finished computers are simply the combination of a number of other products.
Other firms in this industry segment produce computer-related products, known as peripheral equipment. These products include keyboards, mice, printers and scanners. Other peripherals are physically installed in the computers case, and are generally known as internal peripherals. These include hard disk drives, networking cards, modems, sound cards, and disk drives. Many internal peripherals are prepackaged as part of a computer, although almost all of them can be installed by a technician or experienced computer owner.
The communications equipment manufacturing segment of the industry produces a number of devices that simplify communication between individuals or groups. It includes telephones and cellular telephones, as well as equipment used by television and radio stations to transmit information. It should be noted that this does not include computer-related peripheralssuch as networking cards or modemswhich allow computers to connect to other computers.
Audio and video equipment manufacturing is a relatively small industry in the United States and includes companies who produce consumer electronics. These include televisions, stereo receivers, compact disc and DVD players, and other such devices. While these devices are widespread in the U.S., most of them are produced overseas, making employment in this industry relatively small.
Semiconductor and other electronic component manufacturers produce a wide variety of integrated circuits, or computer microchips, which power a wide range of electronic products. They also produce a number of other electronic components, such as resistors and capacitors, as well as printed circuit boards. Unlike most of the companies in this industry, these manufacturers start from basic materials such as silicon and copper and produce intermediate products that are only rarely sold directly to consumers. The exceptions to this rule include companies which produce central processing units and memory chips, although even these products are more likely to be pre-installed in a new computer.
Fabrication plants that build semiconductor products, known as fabs, are fitted with dust-free zones called cleanrooms. Microchip circuitry is so small and complex that it can be ruined by microscopic particles floating in the air, so semiconductor products must be built by computer-controlled machines in an environment with very little human intervention. Most production workers in this industry segment are actually more involved in evaluating manufacturing methods and testing completed chips. Semiconductor manufacturers also spend an inordinate amount of money on research and developmentmore than most companies in the entire computer and electronic product manufacturing industry.
The navigational, measuring, electromedical, and control instruments manufacturing segment is a diverse group of companies that produce products mainly for industrial, military and health care use. It also includes some consumer products, such as global positioning system (GPS) devices, as well as clocks and watches. This segment is one of the largest in the industry, mainly because the Federal Government puts so much money into defense and health care.
Many of the companies in this segment work as government contractors, producing equipment for military purposes. In some cases, this technology has been adapted for consumer use. For example, GPS technology was originally designed for use by the U.S. Navy, but has been developed into a navigation system that individuals can use in their cars. There is also a growing health care component of this industry segment. Extensive government funding for research in medical technology has led to a number of important innovations that are being used worldwide in medical care.
Manufacturing and reproducing magnetic and optical media is another segment of this industry. Firms in this segment produce blank compact discs, DVDs, and audio and video tape. They produce some of this blank media for sale to consumers, but most of it they use to duplicate on a mass scale audio recordings, videos and movies, software, and other media for distribution to consumers and business users. Establishments in this segment are generally either subsidiaries of companies that create the software, movies, or recordings or are independent firms licensed by such companies as distributors.
Recent developments. 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 improve on that design. 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.
Hours. 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 environmentespecially for those in technical and managerial occupations.
Work environment. In general, those working in computer and electronics manufacturingeven production workersenjoy 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.
In 2006, the rate of work-related injuries and illnesses per 100 full-time workers was 2.0 in the computer and electronic parts manufacturing industry, lower than the average of 4.4 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.
The computer and electronic product manufacturing industry employed 1.3 million wage and salary workers in 2006 (table 1). 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 majority78 percentof the industrys workforce.
Companies in this industry also may employ many additional workers in establishments that are part of other industries. Some workers who perform R&D work at separate research establishments that are not actually part of a manufacturing facility in this industry, although owned by the companies in this industry, and so are included in a different industryresearch and development in the physical, engineering, and life sciences. However, due to the importance of R&D work to the computer and electronic product manufacturing industry, computer and electronic product-related R&D is discussed here even though a large proportion of the associated workers is not included in this industry.
The computer and electronic product manufacturing industry has a diverse workforce mainly composed of professionals, who conduct research and development work, and production workers, who are directly involved in the assembly and testing of the industrys products.
Professional and related occupations. About 1 in every 3 jobs in this industry is in a professional occupation (table 2). About 15 percent of those workers are engineerspredominantly 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. Many new hardware devices are now controlled by software, which has increased the share of computer specialists in this field. 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.
Production occupations. About 3 out of 10 employees are production workers. About half of those are assemblers and fabricators, who place and solder components on circuit boards, or assemble and connect the various parts of electronic devices. Electrical and electronic equipment assemblers are responsible for putting together products such as computers and appliances, telecommunications equipment, and even missile control systems. Semiconductor processors initiate and control the many automated steps in the process of manufacturing integrated circuits or computer chips. Some assemblers are highly skilled and use their significant experience and training to assemble major components. A skilled assembler may put together an entire subassembly or even an entire product, especially when products are made in relatively small numbers. Other, less skilled assemblers often work on a production line, attaching one or a few parts and continually repeating the same operation. Increasingly, as production work becomes more automated, assemblers and other production workers monitor the machinery that does the assembly work rather than physically assembling products themselves. Inspectors, testers, sorters, samplers, and weighers use sophisticated testing machinery to ensure that devices operate as designed.
Management, business, and financial occupations. About 16 percent of the workers in the industry are in management, business, and financial occupations. Top managers in this industry are much more likely to have a technical background than their counterparts in other industries. This is especially true in smaller companies, which often are founded by engineers or other technical professionals who found companies to sell the products they develop.
Office and administrative support occupations. About 10 percent of workers in the industry hold office and administrative support jobs. The largest occupation in this group is secretaries and administrative assistants.
Sales and related occupations. A small number of workers are involved in selling products manufactured by the industry. Sales positions require technical knowledge and abilities; as a result, engineers and technicians may find opportunities in sales or sales support.
Training requirements vary greatly among the different occupations in the computer and electronic products manufacturing industry. Workers in all fields must have strong technical knowledge and an ability to work in teams. In most cases, advancement comes in the form of leadership and increased responsibility.
Professional and related occupations. Entry into engineering occupations generally requires at least a bachelors degree in engineering, although those with 4-year degrees in physics, computer science, or another technical area may qualify as well. Some positions, however, may require a masters or doctorate degree. Most advanced positions require a certain amount of relevant work experience. Computer systems analysts or scientists usually need a degree in computer science or a related field, and in many cases they also must have considerable programming experience.
Training for engineering technicians is available from a number of sources. Although most employers prefer graduates of 2-year postsecondary training schoolsusually technical institutes or junior collegestraining in the U.S. Armed Forces or through proprietary schools also may meet employer requirements. Engineering technicians should have an aptitude for math and science. Entry-level technicians may begin working with a more experienced technician or engineer. Advancement opportunities for experienced technicians may include supervisory positions or movement into other production and inspection operations.
Advancement for technical workers comes in a variety of forms, depending on the goals of the individual and the needs of the company. Because companies often are founded by professionals with technical backgrounds, opportunities for advancement into executive or managerial positions may arise for experienced workers who keep up with rapid changes in technology and who possess the business expertise necessary to succeed in a fast-changing economy. Others are not as intrigued by the idea of working in management, and prefer to continue in their technical positions. Top engineers and other technical professionals are often given a great deal of flexibility in their work and offered excellent compensation.
Due to the rapid pace of technological development, technical workers must constantly update their skills and knowledge base to stay abreast. Also, due to the global nature of computer and electronic product manufacturing, knowledge of another language or culture is emerging as a desired qualification for workers in this industry.
Production occupations. Although assembly workers generally need only a high school diploma, assemblers in the computer and electronic product manufacturing industry may need more specialized training or experience than do workers in other manufacturing industries. Precision assembly work can be extremely sophisticated and complex, and some jobs may even require formal technical training. A certificate or associates degree in semiconductor technology or high-tech manufacturing is good preparation for semiconductor processor operator positions.
Advancement opportunities depend not only on work experience, but also on the level of technical training and the ability to keep up with changing technology. Production workers may advance into more responsible positions, as well as team leadership. Experienced workers may work directly with engineers to determine how production methods can be improved.
Management, business, and financial occupations. Managers and executives in this industry tend to be much more technically oriented than in most fields. Because technology is fast-changing, managers and executives must be able to speak intelligently about new developments. They must also be able to work directly with engineers to come up with viable strategies for business development. Many managers in this industry are actually trained as engineers or other technical professionals. Furthermore, many companies in this industry are founded by an inventor or group of inventors who design a new product. Although in many cases these individuals hire others to manage the business, there are still several companies whose CEO is the product inventor.
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.
Employment change. 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 growththe 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 (table 3). 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 companieseven those in segments of the industry doing wellcan 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.
Job prospects. 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 industryespecially powerful computer chipswill 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 associates degree from a technical school.
Industry earnings. Earnings in the computer and electronic product manufacturing industry are generally high; this is partly because many of the lower wage production jobs have been automated or exported to other countries. Average weekly earnings of all production or nonsupervisory workers in the industry were $768, higher than the average of $568 for all industries in 2006 (table 4).
Earnings in selected occupations in several components of the computer and electronic product manufacturing industry in 2006 appear in table 5.
Benefits and union membership. Benefits are very good for workers in this industry with companies offering health care and retirement plans at a minimum. Compared with other manufacturing industries, union membership is relatively small.
More information on computer and electronic products manufacturing is available from:
For information on engineering careers within the industry, contact:
Information on these occupations may be found in the 200809 Occupational Outlook Handbook:
Suggested citation: Bureau of Labor Statistics, U.S. Department of Labor, Career Guide to Industries, 2008-09 Edition, Computer and Electronic Product Manufacturing, on the Internet at http://www.bls.gov/oco/cg/cgs010.htm (visited September 17, 2008 ).
Last Modified Date: March 12, 2008