Computer and Electronic Product Manufacturing Industries

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Nature of the Computer and Electronic Product Manufacturing Industries[About this section] [To Top]

The computer and electronic product manufacturing industry produces computers, computer peripherals, communications equipment, and similar electronic products. These products are used in homes and businesses, as well as in government and military establishments. 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 industry's 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 (R&D). 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.

Most electronic products contain many intermediate components that are purchased from other manufacturers. Companies producing intermediate components and finished goods often choose to locate near each other so that companies can receive new products more quickly and lower their inventory costs. It also facilitates joint research and development projects that benefit both companies. As a result, several regions of the country have become centers of the electronic products 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 several other centers of the industry throughout the country.

Although some of the companies in this industry are very large, most are relatively small. The tradition of innovation in the industry explains the origins of many small firms. Some companies are involved in design or 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 manufacture the product, which is then sold by the original company. Although electronic products can be quite sophisticated, production methods are often similar, making it possible for a single company to manufacture many different electronic products or components with a relatively small investment. Investors often are willing to put their money behind new companies in this industry because of historically large paybacks.

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 companies that make computers and related products, known as peripherals. 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. Computers are made up of components, such as motherboards, central processing units, graphics cards, hard disk drives, and power supplies. 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 peripherals, which are devices that can be used with computers, such as keyboards, mice, printers, and scanners. Other peripherals, generally known as internal peripherals, are physically installed in the computer's case. 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. This segment 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 peripherals—such as networking cards or modems—which 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, CD and DVD players, and other such devices. While these devices are widespread in the United States, most of them are produced overseas, making employment in this industry relatively small.

Semiconductor and other electronic component manufacturers produce integrated circuits, or computer microchips, which power a wide range of electronic products. They also produce 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 that produce central processing units and memory chips, although even these products are more likely to be pre-installed in a new computer.

The navigational, measuring, electromedical, and control instruments manufacturing segment is a diverse group of companies that produce products mainly for industrial, military, and healthcare 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 its primary customers are the U.S. Department of Defense and the healthcare industry.

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 healthcare 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 CDs, 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 audio recordings, videos and movies, software, and other media for distribution to consumers and business users on a mass scale. Establishments in this segment are usually 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 creates 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.

Globalization has become a major factor in the electronics manufacturing industry, often making it difficult to distinguish between American and foreign companies. Many U.S. companies are opening plants and development centers overseas and overseas companies are doing the same in the United States. Many products are being designed in one country, manufactured in another, and assembled in a third. The United Sates electronics industry tends to focus on high-end products, such as computers and microchips. Even so, many components of final products manufactured in the United States are produced elsewhere and shipped to a U.S. plant for final assembly.

Work Environment for the Computer and Electronic Product Manufacturing Industries[About this section] [To Top]

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 environment—especially for those in technical and managerial occupations.

Work 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. Workers in semiconductor product manufacturing must wear special outer garments known as "bunny suits" to avoid bringing dust or other contamination into the manufacturing area, which is known as a "cleanroom." Workers in R&D generally work in offices or laboratories, depending on their specific jobs. In some firms, R&D departments are located close to the production floor to facilitate cooperation between engineers who design new products and production workers who build the products. This helps engineers to customize their designs to fit the manufacturing process, making it easier to bring new products to market.

In 2008, the rate of work-related injuries and illnesses was lower than the average 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.

Employment in the Computer and Electronic Product Manufacturing Industries[About this section] [To Top]

The computer and electronic product manufacturing industry employed 1.2 million wage and salary workers in 2008 (table 1).

Table 1. Distribution of wage and salary employment in computer and electronic product manufacturing, by detailed industry, 2008 (Employment in thousands)
Industry Employment Percent
Computer and electronic product manufacturing, total 1,247.7 100.0
  Navigational, measuring, electomedical, and control instruments manufacturing 441.6 35.4
  Semiconductor and other electonic component manufacturing 432.4 34.7
  Computer and peripheral equipment manufacturing 182.8 14.7
  Communications equipment manufacturing 129.0 10.3
  Manufacturing and reproducing magnetic and optical media 34.9 2.8
  Audio and visual equipment manufacturing 27.0 2.2

The industry is comprised of about 19,100 establishments in 2008, many of which were small, employing only one worker or a few workers. Large establishments of 100 or more workers employed the majority—78 percent—of the industry's 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 they are owned by the companies in this industry. These separate research facilities are usually included in a different industry—research 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 many of the associated workers are not included in this industry.

Occupations in the Computer and Electronic Product Manufacturing Industries[About this section] [To Top]

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 industry's products.

Professional and related occupations. About 34 percent of the jobs in this industry are in professional occupations (table 2). About 15 percent of those workers are engineers—predominantly electrical and electronics engineers and computer hardware engineers, but also many industrial engineers 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 network, systems, and 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 scientists, 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 31 percent of 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. 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. 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. Semiconductor processors initiate and control the many automated steps in the process of manufacturing integrated circuits or computer chips. 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 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. About 4 percent of the industry is made up of workers who sell the 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.

Table 2. Employment of wage and salary workers in computer and electronic product manufacturing, 2008 and projected change, 2008-2018. (Employment in thousands)
Occupation Employment, 2008 Percent Change,
Number Percent
All occupations 1,247.7 100.0 -19.3
Management, business, and financial occupations 201.7 16.2 -17.5
  Top executives 22.7 1.8 -25.4
  Marketing and sales managers 16.6 1.3 -16.7
  Engineering managers 28.6 2.3 -17.9
  Purchasing agents, except wholesale, retail, and farm products 19.0 1.5 -10.1
  Accountants and auditors 13.5 1.1 -15.9
Professional and related occupations 429.8 34.5 -16.4
  Computer software engineers, applications 31.4 2.5 -11.4
  Computer software engineers, systems software 53.2 4.3 -13.7
  Computer support specialists 12.4 1.0 -28.3
  Computer systems analysts 12.5 1.0 -24.8
  Computer hardware engineers 30.6 2.5 -24.9
  Electrical and electronics engineers 68.8 5.5 -19.1
  Industrial engineers 31.4 2.5 -7.3
  Mechanical engineers 22.2 1.8 -9.8
  Electrical and electronic engineering technicians 38.4 3.1 -21.4
  Industrial engineering technicians 14.2 1.1 -14.4
Sales and related occupations 43.9 3.5 -20.8
Office and administrative support occupations 119.3 9.6 -20.6
  Information and record clerks 26.1 2.1 -18.5
  Material recording, scheduling, dispatching, and distributing occupations 39.6 3.2 -23.7
  Secretaries and administrative assistants 19.0 1.5 -18.4
Installation, maintenance, and repair occupations 36.1 2.9 -15.7
Production occupations 384.4 30.8 -22.8
  First-line supervisors/managers of production and operating workers 27.1 2.2 -21.4
  Electrical and electronic equipment assemblers 110.3 8.8 -25.0
  Electromechanical equipment assemblers 25.3 2.0 -15.6
  Team assemblers 57.5 4.6 -17.8
  Machinists 13.5 1.1 -14.9
  Inspectors, testers, sorters, samplers, and weighers 32.9 2.6 -23.0
  Semiconductor processors 30.3 2.4 -33.7
  Miscellaneous production workers 18.5 1.5 -24.3
NOTE: Columns may not add to total due to omission of occupations with small employment.

Training and Advancement in the Computer and Electronic Product Manufacturing Industries[About this section] [To Top]

Training requirements vary 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 bachelor's 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 master's 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 schools—usually technical institutes or junior colleges—training in the Military 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 more experienced technicians or engineers. 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 individual workers 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. 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 a manufacturing assembly worker generally needs only a high school diploma, an assembler in the computer and electronic product manufacturing industry may need more specialized training or experience. Precision assembly work can be extremely sophisticated and complex, and some jobs may even require formal technical training. A certificate or associate 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 positions. 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 in other technical professions.

 Job Outlook for the Computer and Electronic Product Manufacturing Industries[About this section] [To Top]

Employment in the computer and electronic product manufacturing industry is expected to decline rapidly over the next decade, but there should still be favorable employment opportunities in certain segments of the industry—especially in highly skilled positions.

Employment change. Wage and salary employment in the computer and electronic product manufacturing industry is expected to decline by 19 percent between 2008 and 2018, compared with a projected increase of 11 percent in all industries. Although the output of this industry is projected to increase quickly, employment will decline as a result of rapid productivity growth. Employment also will be adversely affected by continued increases in imports of electronic and computer products, including intermediate products such as microchips. Although a great deal of the design work in this industry takes place in the United States, much of the manufacturing process has been moved overseas.

The projected change in employment over the 2008-18 period varies by industry segment (table 3). Although demand for computers should remain relatively strong worldwide, employment is expected to decline 32 percent in computers and peripheral equipment and 34 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.

Table 3. Projected employment change in computer and electronic product manufacturing by industry segment, 2008-18
Industry segment Percent change
Computer and electronic product manufacturing, total -19.3
  Navigational, measuring, electromedical, and control instruments -1.7
  Communications equipment -6.9
  Manufacturing and reproducing magnetic and optical media -25.5
  Computer and peripheral equipment -31.8
  Semiconductor and other electronic components -33.7
  Audio and video equipment -45.9

Employment in navigational, measuring, electromedical, and control instruments manufacturing is expected to decline by 2 percent. The smaller declines in this segment are due mainly to heavy spending on military and healthcare electronics. Sales of consumer navigational devices also will help mitigate job losses in this segment. Employment in audio and video equipment manufacturing is expected to decrease by 46 percent, reflecting continued import competition as well as improvements in productivity. Employment in communications equipment manufacturing is expected to decline by 7 percent due to automation and consolidation among firms in the industry. Employment in the manufacturing and reproduction of magnetic and optical media is expected to decrease by 26 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 production 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, and foreign markets for these goods are growing. Many U.S.-based companies that formerly performed their R&D work domestically are now opening development centers overseas to take advantage of the close proximity to foreign markets.

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, reduced domestic market share, 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. In addition, the intensity of foreign competition and the future role of imports remain difficult to project. The United States continues to have a comparative advantage in many industry segments—more products are exported than imported—but other technologically advanced countries are beginning to erode this advantage. Global 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.

Nonetheless, innovation will continue to drive employment growth within some industry segments. 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 industry—especially powerful computer chips—will continue to enhance productivity in all areas of the economy.

Computer software engineers are also in high demand in this industry because many complicated hardware products require software. This includes both drivers that help devices interface with computers, and software that runs directly on complex devices.

Despite the rapid decline of production jobs, prospects should still be fair for qualified workers. Much of the decline in this industry is concentrated among production workers, as manufacturing becomes more automated and labor-intensive jobs are offshored. Workers with formal training in high-tech manufacturing will have the best opportunities, as changes in the nature of the work have meant that workers need to have a higher skill level than before. Nevertheless, other manufacturing industries are becoming highly technical, which means they often compete with this industry for qualified workers. In many cases, skills learned in this industry are transferrable to other industries.

Computer and Electronic Product Manufacturing Industries Salaries[About this section] [More salary/earnings info] [To Top]

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 domestic production has been replaced by imports from other countries. Average weekly earnings of all production or nonsupervisory workers in the industry were $861, higher than the average of $608 for all industries in 2008 (table 4).

Table 4. Average earnings of nonsupervisory workers in the computer and electronic product manufacturing industry, 2008
Industry segment Hourly Weekly
Total, private industry $18.08 $608
Computer and electronic products manufacturing 21.03 861
  Audio and video equipment 23.08 942
  Electronic instruments 22.67 933
  Computer and peripheral equipment 21.72 904
  Communications equipment 20.86 841
  Semiconductors and electronic components 19.66 800

Wages in selected occupations in several components of the computer and electronic product manufacturing industry appear in table 5.

Table 5. Median hourly wages of the largest occupations in computer and electronic product manufacturing, May 2008
Occupation Computer and electronic
product manufacturing
All industries
Computer software engineers, systems software $46.85 $44.44
Computer software engineers, applications 44.70 41.07
Electronics engineers, except computer 42.59 41.52
Electrical engineers 41.52 39.50
Industrial engineers 38.21 35.49
Electrical and electronic engineering technicians 23.37 25.60
Semiconductor processors 15.45 15.49
Inspectors, testers, sorters, samplers, and weighers 15.09 15.02
Electrical and electronic equipment assemblers 13.34 13.22
Team assemblers 12.32 12.32

Benefits and union membership. Benefits are very good for workers in this industry with companies offering healthcare and retirement plans at a minimum. Because key occupations in this industry are in high demand, many companies offer lucrative benefit packages and other incentives, such as employee fitness centers and on-site gourmet cafeterias, to keep their employees happy. Compared with other manufacturing industries, union membership is relatively small.

*Source: Bureau of Labor Statistics, U.S. Department of Labor. Used by permission.

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