Electronic Design

What's Hot Today: The Big Picture

The Pulse Of Our Industry

Politics and the economy aside (an impossibility in reality), the near- and long-term future of the electronics industry looks pretty good. In general, the outlook for virtually all major industry sectors is healthy from a fiscal standpoint. But with EE unemployment dangling at near record levels, the picture isn't all that rosy.

Even management is taking a beating. A recent survey of executive recruiters by ExecuNet, an executive-level job and networking resource, showed that electronics ranked ninth in January on the company's list of fastest growing industries for job growth. Yet when recruiters were asked about the industries expected to generate the most job growth during the second quarter of this year, electronics dropped completely off its Top 10 list. But the employment picture could improve somewhat over the next several months as companies race to meet new product development and introduction requirements.

If there's one bright spot in EE employment opportunities, it shines within the defense/aerospace sector (see "Outsourcing: How Safe Is Your Job?" Electronic Design, May 10, p. 48). Virtually all major military platform companies are recruiting, as are most of their key subcontractors. The tricky issue here is that lots of these jobs require a security clearance that many engineers either don't have or gave up in recent years when moving to wireless or dot-com organizations.

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New job postings by these companies fall into line with recent market projections by the Government Electronics and Information Association, an affiliate of the Electronic Industries Association (EIA). The GEIA expects that the electronics content alone of Pentagon acquisitions will climb from $77 billion in fiscal year 2004 to $92 billion in FY2014. Much of that will go to so-called "black programs" (hence, the need for lots of new hires with security clearances). But a sizable chunk of the budget is earmarked for the general electronics and communications category.

Specializing in tracking military markets, the Teal Group sees a strong demand for new combat aircraft as well. This research company expects the Depart-ment of Defense to acquire nearly 3000 new aircraft valued at more than $142 billion between 2004 and 2013. There also is growing interest within the Pent-agon in developing new types of unmanned aerial vehicles (UAVs).

Homeland security represents another big opportunity. Here, the emphasis will be on wireless solutions to connect first responders, biometric technologies for identification and authentification, targeting systems, risk analysis management, and data sharing and collaboration tools.

PC DEMAND
Looking to the overall health of the market, the PC is a key area that has seen the highs and lows. PCs have been experiencing higher demand for some time because they're well into an upgrade cycle, pulling peripherals along with them. There doesn't seem to be any slowdown either, with what industry analysts at Gartner Inc. call the "long-awaited corporate PC replacement cycle."

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Even the recently battered telecommunications sector is showing a modest rebound, with the Telecommunications Industry Association (TIA) projecting spending for equipment in this sector at $183 billion in 2007, up 6.4% in compound annual rate from 2003. Wireless equipment sales overall, according to the TIA, will climb from $22.1 billion last year to at least $26.3 billion in 2007, with most of the activity in new chips, smart phones, and Wi-Fi. Forward Concepts, the DSP-focused market research group, says it doesn't expect the wireless local-area network (WLAN) chip market to slow down much any time soon. WLANs grew 175% in 2003.

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New applications, such as wireless Internet access, text messaging, instant messaging, wireless games, multimedia messaging services, and the start of 3G deployment in the U.S., will likely help drive the telecom market too. If so, these sectors could create a bunch of new job opportunities for design engineers.

Consumer electronics shipments, fueled by a dizzying array of new product choices, should come in at record levels this year—just under $100 billion—and could easily top that mark next year. Just about everyone owns a PC, a DVD player, and a cell phone. Now, the new "must have" is a flat-screen LCD or plasma TV receiver. Also popular are the more affordable rear-projection sets. Shipment revenues for digital TV grew an impressive 41% in 2003, and the Consumer Electronics Association (CEA) expects revenues for DTVs to jump at least another 33% in 2004, reaching almost $8 billion.

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With the growing popularity of cell phones equipped with digital cameras, sales for digital cameras were forecast to increase only 6% last year. However, sales actually climbed 22% to $4.2 billion in revenue. Digital-camera unit sales will continue to increase as product offerings expand and prices continue to drop. Plus, with several new online music services and products, the CEA estimates that MP3 device sales will top $700 million this year, helped along by a declining average unit selling price.

INTERCONNECTIVITY
Product interconnectivity is becoming a reality, albeit slowly. According to the CEA, PC-like devices are moving into home networks, reducing the separation between time and place. "There is a fundamental technological shift taking place in the electronics industry," says Will Strauss, president and principal analyst of Forward Concepts. "It is moving from the PC era to a new era driven by connectivity and multimedia."

Design expertise in RF and miniaturization may be at a premium in the industrial electronics area now as manufacturers continue to implement new applications for RF identification. "RFID is an evolving technology with significant potential to differentiate the manufacturer," says Tom Ryan, a vice president of the Aberdeen Group, a technology consultancy.

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Through a series of surveys, market-research firm Evans Data Corp. says that it identified inventory management, security, access control, industrial tracking, and vehicle control as applications of primary interest by companies planning to implement RFID. Even with concerns that RFID technology can be used to track individuals, which raises privacy issues, Evans expects the number of discrete RFID applications to nearly double by 2006.

Automotive electronics is another burgeoning market. Legislation on engine emissions and safety has already generated a market for electronic controllers valued at more than $30 million worldwide, and that could grow to $50 million by 2010. Meanwhile, opportunities abound for devices involving collision warning, night vision, tire-pressure warning, trip computers, navigation and traffic information systems, drowsiness monitors, and remote vehicle diagnostics, among others. Software, which accounted for an estimated 4% of the total vehicle cost in 2002, could increase to 13% by 2010, according to Strategy Analytics.

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Another growing opportunity within the industrial-electronics arena, at least near-term, lies in ruggedized/industrial computer systems. This sector has been experiencing a decline in commodity component prices and more competition from new market players.

Most of the action in test and measurement involves wireless, says Galen Wampler, an analyst who follows T&M for Prime Data. "Anything to do with wireless is a growth area" for T&M, he says. Only now is 3G wireless being introduced in the U.S. It presents a new growth opportunity, especially for spectrum analyzer makers.

Wampler says the optical test market continues to slowly recover and may not make any noticeable growth numbers until 2005. Also in that category is voice-over-IP (VoIP). Overall, most analysts expect the telecom/datacom market for T&M to reach or slightly exceed $5 billion by 2006.

Medical electronics is a difficult market to track, with its many applications either emerging or in test. But it can't be denied that electronics technology is making a serious impact on medicine, with a quickly expanding range of new products for diagnostic instrumentation (including wireless devices and microelectromechanical systems, or MEMS). Device packaging, with more emphasis on miniaturization, is another key R&D area in medical electronics. For instance, there's a big push in developing personal-area networks to control and monitor implantable medical devices. Operating in the 400-MHz RF band, these devices contact physicians when the implanted mechanism detects a medical problem.

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NEXT BIG THING?
Opinions range on what new technology or product will take the industry by storm. Nanotechnology is an obvious candidate, with standards development already well under way for automobile "black boxes." Biometrics is another possibility, especially wearable computers and networks. When you say you're "plugged in," it won't be just a figure of speech. Recent advances point to a new generation of very light, mostly hidden, and highly miniaturized "wearware" with a range of intelligent applications.

Where does all of this leave working engineers? Most companies, especially the giants, don't seem fazed by the inordinate bad press about the industry's growing involvement in offshore manufacturing. In fact, many companies that rely on offshore contract manufacturing expect continued strong demand for their products.

It's not clear that political support for working engineers, even in this election year, will make a dent in outsourcing. Despite pronouncements by legal experts to the contrary, a recent study by the National Foundation for American Policy, a nonpartisan trade think tank, says efforts by U.S. state and federal lawmakers to outlaw government work from going offshore may violate the Constitution and federal trade laws.

John Steadman, president of the IEEE-USA, the IEEE's lobbying group based in Washington, D.C., argues that "it's going to be difficult to remain technologically competitive if we continue offshoring the jobs of our innovators at rates currently projected." Nonetheless, engineering job postings are seemingly on the rise, particularly for military/aerospace contractors and wireless equipment manufacturers.

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