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Electronics Industry Pushes Innovation, Reaps Rewards

With a rotating cast of new products to amaze and tempt consumers, the electronics industry is reaping big revenues.

Lisa A. Bastian (November 2010)
(page 2 of 3)
U.S. Consumer Electronics Sales and Forecast reports that digital displays will continue to see increasing unit sales, but "slightly less revenue due to fierce pricing competition." And, "shipments of 3D displays will increase to 2.1 million this year, doubling the original forecast in January, and shipment revenue should top $2.7 billion." By 2011, the circa six million units projected to be sold could generate more than $7 billion in revenue.

Electronics and the Silicon Valley
You can't discuss electronics without mentioning California's Silicon Valley, home of genius entrepreneurs and fast-thinking companies inventing the future today.

But cutting-edge innovation - the ideas, the designs - is Silicon Valley's real product, as manufacturing is typically outsourced to India and China. The integrated circuit, personal computers, and other equally amazing hardware and software inventions were created here. That all gave rise to the Internet, which is still evolving and maturing.

The Valley's superstar residents includes Apple, Hewlett-Packard, Oracle, Yahoo!, Adobe, NVIDIA, Cisco, Juniper Networks, eBay, Intel, Google, Facebook, Intuit, Applied Materials, and Synopsis, as well as a host of defense industry companies. Household names and firms obscure to the public feed on each other's creative energies.

"It's not like all the companies are making widgets that you and I buy," says David Sass, senior vice president with Grubb & Ellis in San Jose, who has his finger on the pulse of this regional industry. "Most of these electronics products are things integrated into other things." The success of Silicon Valley firms in electronics and associated industries has always been tied to technologic advances. Recently, green tech and cleantech industries have been gaining prominence. "They both rely upon the electronics industry, so that's why we have [quite a number] of them in the area," Sass says. "The solar energy firms, for example, have some electronics going into their products. And Tesla Motors is building electric cars with tons of clean technology components." Tesla is currently the only company with highway-capable electrical vehicles in serial production. While the recession has affected the region's cluster, overall, the industry "is firming up," according to Sass. He says, "2009 was a horrible year for semiconductors, but 2010 is looking very good and will help lead us out to prosperity."

Electronics and IT firms love Silicon Valley because it attracts "a little more than 30 percent of all venture capital invested in the United States," Sass says. "We have all these outstanding technical assets, and so much outstanding talent." Some of that talent comes from MIT and other out-of-state institutions, but much of it is homegrown. Local powerhouse universities such as UC Berkley and Stanford prepare their students to meet the requirements needed to survive and excel in the electronics sector, while training its next generation of talent.

New Investments
Despite the innovation exemplified in the Silicon Valley, wage and salary employment for electronics industry workers is expected to decline by 19 percent between 2008 and 2018, compared with a projected increase of 11 percent in all industries, according to the U.S. Bureau of Labor Statistics. However, highly skilled positions should be relatively safe. Automated manufacturing processes, newer technologies, and importing computers and electronics will contribute to these employment declines, particularly in computers and peripheral equipment, and semiconductor and other electronic component manufacturing.

But industry growth will persist. New Venture Research Corp., a market research firm, predicts global electronics manufacturing services to grow an average of 8.1 percent annually until 2013. Gartner, a worldwide research organization, expects the semiconductor industry to growth through 2014, with the market exceeding $300 billion in 2012. That explains why some U.S.-based electronics firms are expanding or moving operations. Here are just a few examples:
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