Lisa A. Bastian (November 2010)
Besides a penchant for fast cars and even faster women, the fictional James Bond wowed audiences with his technologically advanced electronics. Today, the booming electronics industry is making futuristic devices that are more powerful and exciting than anything the super spy used.
These advances are changing every part of our lives, from how we socialize, entertain ourselves, and educate our children, to how we gather information, do business, and protect our nation from physical and cyber attacks.
Nearly every month, companies announce the debut of another exciting electronics product - as well as amazing R&D that furthers the development of mind-blowing electronics that seemed impossible to produce only a decade ago.
This fall, scientists Andre Geim and Konstantin Novoselov won the 2010 Nobel Prize in physics for their groundbreaking experiments with graphene, a two-dimensional material. A one-atom-thick sheet of special carbon atoms arranged in a honeycomb crystal lattice, this nano material can be used as a conductor or a semiconductor due to its unique electronic properties. Graphene will be integral to the production of future nanoscale electronic devices. Georgia Tech scientists have already developed a "transistor growth technique" for graphene, which paves the way for the accelerated use of the material in the electronics industry.
Consumer Electronics on the Upswing
The $165 billion U.S. consumer electronics (CE) industry is working overtime to drive America's economy into recovery. In September, the Consumer Electronics Association (CEA) announced that the industry "will exceed initial revenue projections for 2010, with growth of 3 percent over 2009 and overall shipment revenues of $174.9 billion in the United States." With more than 2,000 members, the Arlington, Virginia-based CEA tracks sales data, forecasts, consumer research, and historic trends for the CE industry.
Industry shipment revenues will increase 4 percent to an all-time high of more than $182 billion by 2011, according to CEA's semi-annual U.S. Consumer Electronics Sales and Forecast from July 2010. "Innovation in the CE industry is driving consumer enthusiasm, orchestrating a turnaround for our industry, and bolstering the overall U.S. economy," says Gary Shapiro, CEA president and CEO. "The response to innovative new products like tablet computers and 3D displays, and continued growth of other product categories, illustrate that consumers love technology. The freedom to innovate delights consumers, sustains our industry, and strengthens the economy."
The latest forecast increases CEA estimates for 2010 shipment revenues, last updated in January 2010, by more than $9 billion. Much of the industry growth is attributed to 3D televisions, smart phones, Blu-ray players, e-readers, and mobile computing solutions such as tablets that will contribute billions of dollars to the industry's bottom line this year.
"The January edition of the forecast was cautiously optimistic about the industry's return to growth this year," says Steve Koenig, CEA director of industry analysis. "Despite a relatively sluggish first half, these innovative product categories have generated a great deal of consumer interest. As a result, we see a stronger second half demand unfolding, and we anticipate a robust holiday quarter."
The mobile computing category is expected to see a robust 2010 and become the main revenue earner for the CE industry by 2011. CEA expects mobile computing - which includes laptops, netbooks, and tablet computers - to post over $26 billion in shipment revenues by next year. Tablet PCs will drive most of the computing category growth as more firms enter the marketplace.
Also experiencing steady growth are wireless handsets. CEA expects them to add $26 billion to industry revenue by 2011. "Smart phones continue to be the key driver, with more than 54 million units expected to ship in 2010, an increase of nearly 31 percent. By 2011, more than 66 million smart phones will ship to dealers, generating $19.6 billion in revenue."
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.
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:
• The International Sematech Manufacturing Initiative recently announced a headquarters relocation from Austin, Texas, to a 14,000-square-foot facility at New York's University of Albany NanoTech Complex. The move creates over 100 high tech jobs, and will bolster New York's reputation as a global leader in advanced nanotechnology. With $6.5 billion in high tech investments, the complex already has 2,500 scientists, researchers, and other employees working at IBM, SEMATECH, Toshiba, Applied Materials, Tokyo Electron, ASML, Novellus Systems, and elsewhere.
• The Hemlock Semiconductor Group of Thomas Township, Michigan, makes polysilicon, a key raw material used to produce solar cells and semiconductor devices. Over the last five years, it has invested over $2.5 billion at its Hemlock Michigan facility. It will invest another $1.2 billion in a new solar production facility in Clarksville, Tennessee.
• In June, Samsung Austin Semiconductor announced plans to hire 500 employees and expand its 12-inch semiconductor fabrication plant in Austin, Texas. Expected to be operational by the second quarter of 2011, the facility will support production of advanced logic devices. The $3.6 billion investment brings the company's total investment in Austin to over $9 billion.
• Internationally, Santa Clara, California-based Intel, the world's largest chip maker, will invest $177 million over three years to expand its Guadalajara Design Center (GDC). As the firm's biggest Mexican site, it houses all technology development activities in that nation. GDC designs, tests, and validates integrated circuits and hardware and education software technologies. Over 150 tech jobs will be created, bringing the total number of GDC engineers to 550.
Across all regions, and even across the globe, the American electronics industry continues to grow investment in a future that many consumers once only dreamed about.