The computer and electronic product manufacturing industry produces computers, computer-related products such as printers, communications equipment, and home electronic equipment, as well as a wide range of goods used for both commercial and military purposes. In addition, many electronics products or components are incorporated into other industries’ products, such as cars, toys, and appliances.

Products manufactured in this industry include computers and computer storage devices, such as disk drives, and computer peripheral equipment, such as printers and scanners; communications equipment, such as wireless telephones and telephone switching equipment; consumer electronics, such as televisions and audio equipment; and military electronics, such as radar, communications equipment, guidance for “smart” bombs, and electronic navigation equipment. This industry also includes the manufacture of semiconductors-silicon or computer “chips,” or integrated circuits-which constitute the heart of computers and many other advanced electronic products. Two of the most significant types of computer chips are microprocessors, which make up the central processing system of computers, and memory chips, which store information. Technological innovation characterizes this industry more than most others and, in fact, drives much of the industry’s production. Many new products reflect a convergence of technologies. Such products include digital cameras and hand-held devices that permit wireless Internet access.

The computer and electronic product manufacturing industry differs from other manufacturing industries in that production workers account for a much lower proportion of all workers. The unusually rapid pace of innovation and technological advancement requires a high proportion of engineers, engineering technicians, and other highly technical workers to continually develop and produce new products. Likewise, the importance of promoting and selling the products manufactured by the various segments of this industry requires knowledgeable marketing and sales workers. American companies manufacture and assemble many products abroad because of lower production costs and new trade agreements.

Companies producing intermediate components and finished goods frequently locate near each other because doing so allows easier access to recent innovations. Electronic products contain many components-and sometimes even major parts, such as integrated circuits-that often are purchased from other manufacturers. As a result of having the skilled workforce that fosters product improvement, some areas of the country have become centers of the electronics 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 electronics manufacturing plants throughout the country.

To a large extent, electronics manufacturing has become truly global, and it is difficult to characterize many companies and their products as American or foreign. The movement of foreign companies to manufacture some goods in the United States does not change the fact that many products are being designed in one country, manufactured in another, and assembled in a third. Highly sensitive and sophisticated products such as semiconductors and computers are being designed and manufactured in the United States, for example, but it remains likely that other parts of final products, such as the keyboards and outer casings, are made somewhere else and shipped to yet another site for final assembly.

Although some of the companies in this industry are very large, most are actually small. The history of innovation in the industry explains the startup of many small firms. Some companies are involved in design or research and development (R&D), whereas others may simply manufacture components, such as computer chips, under contract for others. Often, an engineer or physicist will have an innovative idea and set up a new company to develop the product. Although electronic products can be very sophisticated, it has been possible to manufacture many electronic products or components (not necessarily finished products) with a relatively small investment. Furthermore, investors often are willing to put their money behind new companies in this industry because of the history of large paybacks from some very successful companies. Success always will depend on innovation, and, although investment costs are rising, there should continue to be opportunities to develop good ideas.

The rapid pace of innovation in electronics technology makes for 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 copy the technology or develop a better chip. 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. Often tedious, hand assembly requires both good eyesight and coordination, as many of the parts are very small. However, because of the cost and precision involved, assembly and packaging are becoming highly automated.