It's a crazy game of Catch-22. A loud call for more U.S. EEs comes from the likes of the IEEE-USA, the Semiconductor Industry Association, the American Electronics Association, and several other groups that want to maintain and promote the United States as the world center of technical innovation. Yet jobs are scarcer than ever, as they move offshore or get eliminated through industry downsizing and restructuring.
Hewlett-Packard recently announced a massive restructuring with 14,500 job cuts, including about 10% of HP Labs' technical staff. Kyocera plans to hire contract manufacturer and designer Flextronics International to replace its cell-phone manufacturing operation in North America, resulting in 1700 job cuts. San Diego-based Kyocera was producing 10 million cell phones a year.
India and China are now the primary destinations of electronics outsourcing. Yet Mexico, a longtime major source of cheap labor for TV and printer assembly, has become a hotspot for manufacturing and engineering services. Among those expanding to south of the border are Flextronics International, Freescale Semiconductor, HP, and IBM.
Nokia plans to extend its operations in Mexico as well. It also is building a new mobile phone plant in India, the company's first manufacturing facility in that country. Nokia will invest $150 million in the Indian plant, which is scheduled to open by the middle of next year and eventually employ 2000 people.
Well over half (60.6%) of the respondents to Electronic Design's 2005 Reader Profile Survey indicated that their company was outsourcing manufacturing or assembly, while just over half (52.1%) said they're now outsourcing design work. Most of the offshore work is going to India (26.1%) and China (23.5%).
U.S. still leads
The survey's respondents also said that 67.6% of their company's outsourced work was going to other locations in the U.S. According to market researcher iSuppli's Design Influence Tool (DIT), which measures purchases in U.S. dollars for 169 OEMs worldwide representing 75% of the global chip market, the U.S. continues to lead the world in electronic systems design. But for how long? What will new product development and innovation cost?
"It's hard to generalize with any confidence," says Ben Zarlingo, a communications test product manager at Agilent Technologies. "What I hear consistently is that organizations need complicated products designed very quickly, under very tight budgets. I'm not sure if that can be boiled down to one issue, but perhaps it generally falls under the heading of competitive pressures."
Alan Hill, principal engineer at Raytheon Missile Systems, pretty much agrees. "Industry is being pressured to perform faster so there is less opportunity to do on-the-job training," says Hill. "As a hiring manager, the best that I hope for is that the applicant has sufficient training that they can readily adapt to needs of our [military] customers and industry."
Indeed, when asked about the professional issues keeping them up at night, respondents most often chose "looming project deadlines" (36.3%). The other most common reasons for worry were staying current with new and emerging technologies, concerns about job security and the economy, and outsourcing issues.
While most of the world's electronic designs continue to originate in the U.S., this contrasts sharply with the country's propensity to outsource its production to other regions. Greg Sheppard, executive vice president for iSuppli, notes that U.S. influence in electronic design is actually on the rise.
More than 40.2% of new semiconductor sales in 2005 are driven by design activity in the U.S. That's the largest growth among the top 10 design nations. But while U.S. semiconductor manufacturers still have 47% of the worldwide microchip market, only 20% of new production facilities now under construction are in the U.S.
The DIT study expects electronic system design in the U.S. to drive 33.5% of the world's semiconductor purchasing in 2005, amounting to $58.7 billion worth of chip sales for the year. Japan is second, with its design activity generating 26.1% of worldwide chip sales, followed by Taiwan at 9.9%, Germany at 5.8%, China/Hong Kong at 5.4%, and South Korea at 5.3%.
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