Wage and salary employment in the computer and electronic product manufacturing industry is expected decline by 12 percent between 2002 and 2012, compared with a 16 percent projected increase in all industries. Although the output of this industry is projected to increase more rapidly than that of any other industry, employment will still decline as a result of continued rapid productivity growth-the 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, and by a more recent trend-outsourcing of some professional functions, such as computer programming and engineering, to lower-wage countries. Despite the overall projected decrease in employment, 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 retirements or other reasons, should continue to provide many employment opportunities in this industry, especially in research and development. Products of this industry, especially powerful computer chips, will continue to enhance productivity in all areas of the economy.

The projected change in employment over the 2002-12 period varies by industry segment. Although demand for computers should remain relatively strong worldwide, employment is expected to decline 27 percent in computers and peripheral equipment and 15 percent in semiconductor and other electronic component manufacturing due to the introduction of new technology and automated manufacturing processes, and due to a slowdown in growth of output in these segments from previously high levels. These segments also will continue to face strong import competition. Employment in navigational, measuring, electromedical, and control instruments manufacturing also is expected to decrease 12 percent due to automation of the production of increasingly sophisticated equipment. Employment in audio and video equipment manufacturing also is expected to decrease, by 8 percent, largely due to continued import competition as well as productivity improvements. However, employment in communications equipment manufacturing is expected to increase 5 percent due to strong demand and rapid technological developments such as wireless phones. Ownership of wireless phones has grown quickly in recent years; continuing improvements in quality and services should lead to even greater growth between 2002 and 2012. The only other segment expected to increase employment, by 11 percent, is the manufacturing and reproduction of magnetic and optical media.

Among occupations in the computer and electronic product manufacturing industry, there should be a smaller decrease in employment among professional and related occupations than most other occupations in the industry. However, use of the Internet and other new forms of communication makes it possible for engineers and other professionals working in other countries to do much design and other work that previously was done in this country. Some of these workers are directly employed by U.S. companies and others work for contractors engaged by domestic companies. Because the earnings of professional workers in many countries are much less than earnings in this country, the trend toward hiring foreign workers undoubtedly will accelerate, especially as companies gain more experience and confidence in the use of these workers. While this trend undoubtedly will negatively affect professional worker employment, there still will be numerous jobs in this country that cannot be exported.

Employment of production occupations is expected to decline more rapidly than that of the industry as a whole, as more jobs are lost to technological innovation. However, the numbers of semiconductor processors will decline at a slower rate than that of other production occupations.

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 companies can run into trouble-even those in segments of the industry doing well-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 import 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.

As defense expenditures are expected to increase, sales of military electronics, an important segment of the industry, will likely pick up. Furthermore, firms will continue developing new products, creating large new markets as they have in the past. Smaller, more powerful computer chips are continually being developed and incorporated into an even wider array of products, and the semiconductor content of all electronic products will continue to increase. The growth of digital technology, artificial intelligence, multimedia applications, and the expansion of the Internet and demand for global information networking will continue to create new opportunities.