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TABLE 3-11 Engineers at U.S. Chip Firms by Location (in thousands)

 

1999

2000

2001

2002

2003

2004

2005

United States

61.9

76.1

72.6

72.9

72.0

66.6

83.2

Offshore

17.5

20.0

27.2

29.8

30.9

34.6

42.2

Percentage in the United States

77.9

79.2

72.7

70.9

69.9

65.8

66.3

Source: Brown and Linden, Table 11, this volume.

degrees do not provide enough return on investment to justify the time and expense of pursuing them.3 Companies are still hiring foreign students who earn degrees from U.S. institutions, however, who can work at U.S. companies on H1-B visas. Interestingly, when the number of H-1B visas was cut recently, U.S. semiconductor companies reacted by sending their visa-holding Indian and Chinese employees back to their home countries to help manage and develop subsidiaries there.

Although offshoring has had positive impacts on destination countries, India and China face challenges in upgrading their educational systems to produce more engineering graduates and making their infrastructure, such as electrical power, more reliable. Overall, however, experience in the semiconductor industry shows that offshoring is likely to become a trend for engineering work everywhere. For example, both Taiwan and India are now offshoring work to China.

Because semiconductors are critical components of many modern weapons systems, the U.S. Department of Defense (DOD) is justifiably concerned about maintaining access to semiconductors and related capabilities in design and manufacturing. In 2005, a task force of the Defense Science Board released a report recommending that DOD not only take steps to track the military’s needs and ensure that “trusted microelectronics components” are available, but also spearhead a broad national effort to ensure that leading-edge microelectronics skills and capabilities remain in the United States (DSB, 2005).

It should be noted that there has also been significant “onshoring” in semiconductor design. Foreign-based firms like Philips, Hitachi, and Toshiba, for example, maintain extensive design operations in the United States.

REFERENCES

ASCE (American Society of Civil Engineers). 2005. Offshoring of Engineering Services. Policy Statement. Available online at http://www.asce.org/pressroom/news/policy_details.cfm?hdlid=507.

Aspray, W., F. Mayadas, and M.Y. Vardi, eds. 2006. Globalization and Offshoring of Software: A Report of the ACM Job Migration Task Force. New York: Association for Computing Machinery. Available online at http://www.acm.org/globalizationreport/.

BLS (Bureau of Labor Statistics). 2007. Occupational Employment Statistics, 2007. Available online at http://www.bls.gov/oes/home.htm.

Bureau of the Census. 2004. Economic Census 2002. Available online at http://www.census.gov/econ/census02/.

BusinessWeek. 2006. Toyota in China: Full Speed Ahead. BusinessWeek, March 9.

Campbell, A., G. Rotz, and K. Worzel. 2005. Getting Fit in Pharma: From Periodic Cost-Cutting to Continuous Productivity Improvement. New York: Marakon Associates. Available online at http://www.marakon.com/ideas_pdf/id_051205_campbell.pdf.

CII (Construction Industry Institute). 2004. Planning a Global Virtual Engineering Team: A Tool for Success. Research Summary 211-1. Austin, Tex.: CII.

Cohoon, J.D. 2006. Remarks at the Workshop on the Offshoring of Engineering. National Academy of Engineering, Washington, D.C., October 24, 2006.

DSB (Defense Science Board). 2005. High Performance Microchip Supply. February. Available online at http://www.acq.osd.mil/dsb/reports/2005-02-HPMS_Report_Final.pdf.

Gray, N. 2005. PharmExec 50: Untying the Gordian Knot. Special Report. Pharmaceutical Executive (May): 84–100.

Hamm, S., and D. Kopecki. 2006. Tech’s Threat to National Security. BusinessWeek.com. November 2. Available online at http://www.businessweek.com/technology/content/nov2006/tc20061102_797312.htm?campaign_id=rss_tech.

Hecker, D.E. 2005. High-technology employment: a NAICS-based update. Monthly Labor Review 128(7): 57–72.

IHT (International Herald Tribune). 2007. China approves $2.5 billion Intel Corp. chip plant amid booming demand in country. IHT, March 13.

Krazit, T. 2005. Microsoft: Multicore Chips Changing PC Software. InfoWorld, October 26. Available online at http://www.infoworld.com/article/05/10/26/HNmicrosoftchips_1.html.

McKinnon, R., K. Worzel, G. Rotz, and H. Williams. 2004. Crisis? What Crisis? A Fresh Diagnosis of Big Pharma’s R&D Productivity Crunch. New York: Marakon Associates. Available online at http://www.marakon.com//ideas_ pdf/id_041104_mckinnon.pdf.

McKinsey Global Institute. 2005. The Emerging Global Labor Market. New York: McKinsey & Company. Available online at www.mckinsey.com/mgi/publications/emerginggloballabormarket/index.asp.

NSB (National Science Board). 2006. Science and Engineering Indicators. Arlington, Va.: National Science Foundation.

O’Conner, A. 2006. India a growing option for low-cost drug trials. The Australian, October 11. Available online at http://www.theaustralian.news.com.au/story/0,20867,20557947-12332,00.html.

Saxenian, A. 2006. International Mobility of Engineers and the Rise of Entrepreneurship in the Periphery. Research Paper 2006/142. United Nations University World Institute for Development Economics Research. Available online at http://www.wider.unu.edu/publications/publications.htm.

Thursby, J., and M. Thursby. 2006. Here or There? A Survey on the Factors in Multinational R&D Location. Washington, D.C.: The National Academies Press. Available online at http://www.nap.edu/catalog/11675.html.

ValueNotes. 2006. Offshoring of Automotive Design & Engineering Services to India. July.

Zhao, Z., A. Jaideep, and W. Mitchell. 2005. A Dual Networks Perspective on Inter-Organizational Transfer of R&D Capabilities: International Joint Ventures in the Chinese Automotive Industry. Journal of Management Studies 42(:1): 127–160.

3

This perception that pursuing a graduate degree in engineering is not a great investment might well exist in other fields, but Brown and Linden were the only authors to address it in detail.



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