Profile
Silicon Valley
electronic components firms compete on value-added services, rapid prototyping and niche,
product runs computer and consumer electronics firms. Electronic components firms produce
specialized supplies for Silicon Valley's computer, electronics, and semiconductor firms.
Most components are produced by contract manufacturers to meet the design specifications of major companies. Commodity printed circuit boards and high volume electronic components are manufactured in lower cost locations. Contract manufacturers such as Solectron specialize in customizing products for Valley firms on a fast turn-around basis where proximity between design and manufacturing is critical for meeting short production runs.
The electronics components cluster employed 23,407 in early 2004, and retained a very high employment concentration that is 6 times the national concentration. Electronics and instrumentation firms captured 15% of all Silicon Valley venture capital dollars in 2004. Total dollars awarded to electronics and instrumentation firms rose from more than $534 million in 2002 to about $633 million in 2004.
Changes driving opportunities
Silicon Valley electronic components firms compete on value-added services, rapid prototyping and niche product runs for computer and consumer electronics firms. Electronic components firms in Silicon Valley have evolved away from the production of high volume devices to collaborating with customers on designs and producing smaller runs of more complex and sophisticated devices that provide local customers with a competitive edge. The move away from the manufacturing of ommodity electronic products, such as bare printed circuit boards, in Silicon Valley has led to a decline in total employment in the cluster. Higher paid positions in engineering and customer services have remained.
Lean manufacturing: Transforming work on the shop floor, the speed production time, and the amount of work in progress inventory, contract electronic manufacturers used the fundamentals of the Toyota production system to improve their throughput and efficiency. These efforts of making ‘value’ flow to the customer have been a major source of productivity improvement for electronic components manufacturers such as Solectron and Flextronics.
Returns management: Increasingly, high value customer service in the electronic components industry means managing the logistics and repair on defective or damaged original equipment products. As an example, when defective products come back from the end consumer, an electronic components manufacturer would manage the logistics of returning equipment, the repair and refurbishment work and the return of the product to the end-customer or the OEM. More information: Frost & Sullivan Market Insight – Select Panel Discussion: Optimization Opportunities in the Computer Equipment Supply Chain.
Where the opportunities are
Movement towards higher value services with logistics: moving beyond commodity production of electronic components towards collaborative design, lean manufacturing and product logistics services is a clear opportunity for electronic components firms.
For example, Solectron, serving the automotive, communications, computing and storage, consumer products, industrial, medical and networking industries, provides services during all phases of product development. On initiation, Solectron engineers collaborate on product design specifications for manufacturability, and product life extension. During production, Solectron employs lean manufacturing techniques to promote manufacturing efficiency – and on completion, provides product logistics support and repair.
Value Added Prototyping: Value-added services in prototyping are a key component of electronics manufacturing firms in the Valley. Electronic components firms provide prototyping and design service to original equipment manufacturers.
For example, Flextronics in San Jose supports full turnkey electronics manufacturing services including prototyping, PCB assembly, and complete system integration. Flextronics staff shepherd products through complete prototyping and product introduction services for process verification, initial product introduction ramp and transfer to volume manufacturing. Product design and product development happen concurrently, improving time to market.
Production for Original Equipment Manufacturers (OEM): Increasingly, electronic components firms are moving towards providing cost efficient production of lower-end electronic end-products such as phones, networking equipment and some wireless products. This is an important shift moving electronic components firms up the value chain, from the production of individual components to assembling final products.
For example, in 2003 Sanmina-SCI leveraged their core competencies in application solutions
and marketing to win several multi-year outsourcing agreements in global server manufacturing
and distribution and communications. This type of original equipment manufacturing is a step up
the value chain for Sanmina-SCI towards production of final consumer products requiring a greater
level of manufacturing efficiency, global procurement and customer service.
More information: http://www.sanmina-sci.com/Info/Company_pro/letter.html.
Major labor market trends
The electronics components cluster employed 23,407 in early 2004, and retained a very high employment concentration of 6 times the national concentration. About 2% of all Silicon Valley employment is in electronics components, distributed across 389 operating Silicon Valley firms.
Labor market overview
| Electronics Components Cluster | 2004* |
|---|---|
| Employment | 23,407 |
| Pay per employee | $ 74,650 |
| Employment Concentration** | 6.09 |
| Share of Silicon Valley Employment | 2.0% |
| Number of Firms | 389 |
Source: California Employment Development Department
*2004 is the average of quarters 1 & 2 based on data availability,
**Employment concentration is given in 2003
Pay per employee climbed from $69,747 in 2001 to $74,650 by 2004 – an indication of rising productivity per employee and demand for skilled talent in the industry.
Pay per Employee
| Electronics Components Cluster | 2001 | 2002 | 2003 | 2004* |
|---|---|---|---|---|
| Pay per employee | $ 72,795 | $ 69,726 | $ 74,338 | $ 74,650 |
Source: California Employment Development Department
*2004 is the average of quarters 1&2 based on data availability
Silicon Valley firms
Sanmina SCI is an Electronics Contract Manufacturer (EMS) serving the global EMS market. The Company provides end-to-end manufacturing solutions in support of large OEMs primarily in the automotive, communications, computing, defense and aerospace, industrial and semiconductor systems, medical systems, and multimedia markets.
Cambrios Technologies is a start-up using biological technology to transform the way commercial electronic products are made, expanding their impact, and reducing their environmental costs. Cambrios directed-evolution technology platform is the first practical union of biology and electronics. By applying the techniques of molecular biology to the synthesis and assembly of commercially important materials, Cambrios is able to manufacture electronic components in completely new ways.
Conductus, Inc., founded in 1987 and based in Sunnyvale, California, develops, manufactures, and markets electronic components and systems based on superconductors for applications in the worldwide telecommunications markets. For many applications, the unique properties of superconductors offer significant performance advantages over products based on conventional copper electronic components. These advantages can provide improved price/performance at the system level because of enhanced sensitivity and efficiency as well as reduced size and weight.
Intematix Corporation is an electronic components and materials manufacturing and R&D firm. Founded in 2000, Intematix has provided fast and efficient materials R&D for industry leaders in materials, telecommunications, automotive, aerospace and semiconductor industrial sectors. Using proprietary high throughput synthesis and creening of technology-enabling materials Intematix is able to produce and characterize a large amount of different materials simultaneously. This technology enables Intematix to provide materials solutions more than one hundred times faster than conventional methods.
Venture Capital
According to the MoneyTree venture capital survey, the electronics and instrumentation category includes electronic parts that are components of larger products and specialized instrumentation, including scientific instruments, lasers, power supplies, electronic testing products, power supplies, and display panels. Also included are business and consumer electronic devices such as photocopiers, calculators, and alarm systems.
Total dollars awarded to electronics and
instrumentation firms rose from more than $534 million in 2002 to about $633 million in 2004.
Industry investments were an increasing
share of all Silicon Valley venture capital investment during the 2002 to 2004 period,
rising from 10.6% to 15.4%.
Venture Capital Investment in Silicon Valley Electronics and Instrumentation Firms
| Electronics and Instrumentation | Electronics and Instrumentation share of Silicon Valley | Silicon Valley | |
|---|---|---|---|
| 2002 | $ 534.57 | 10.6% | $ 5,045.26 |
| 2003 | $ 605.09 | 14.2% | $ 4,269.55 |
| 2004 | $ 633.51 | 15.4% | $ 4,100.51 |
| Grand Total | $ 1,773 | 13% | $ 13,415 |
Dollars in Millions
Source: PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree Survey
Cluster Infrastructure
American Electronics Association: With its main offices in Silicon Valley, AeA, founded in 1943,
is a nationwide non-profit trade association that represents all segments of the technology
industry and is dedicated solely to helping its members’ top line and bottom line. AeA represents
small, medium, and large member companies, lobbying governments at the state, federal, and
international levels; providing access to capital and business opportunities; and offering
select business services and networking programs.
More information: http://www.aeanet.org/Default.asp?bhcp=1Index
Information Technology Association of America: The ITAA is the leading trade association
serving the information technology industry. It supports the health, prosperity and competitive
nature of the information technology industry, advocating on legislative and regulatory issues,
compiling studies and statistics, and promoting the industry nationally and internationally.
More information: http://www.itaa.org/eweb/StartPage.aspx
TechNet: Headquartered in Silicon Valley, TechNet promotes the growth of technology and
the innovation economy. TechNet focuses on politics and policy by uniting its members and
policy makers to sustain and advance America’s global leadership in innovation. TechNet also
operates offices in the high-tech centers of Southern California, New England, Texas and the
Pacific Northwest. TechNet’s members represent more than one million employees in the fields
of information technology, biotechnology, ecommerce and finance.
More information: http://www.technet.org/
Research Universities
Stanford University
UC-San Francisco
UC-Berkeley
UC-Santa Cruz
Cluster Components
| NAICS Code | Description |
|---|---|
| 334411 | Electron Tube Manufacturing |
| 334412 | Bare Printed Circuit Board Manufacturing |
| 334415 | Electronic Resistor Manufacturing |
| 334416 | Electronic Coil, Transformer and Other Inductor Manufacturing |
| 334417 | Electronic Connector Manufacturing |
| 334418 | Printed Circuit Assembly (Electronic Assembly) Manufacturing |
| 334419 | Other Electronic Component Manufacturing |
| 3359 | Other Electrical Equipment and Component Manufacturing |