The number of employees in the US chip industry hit a record low tonight. Does EE still have a future?

The Wall Street Journal reported that by the end of 2015, Alphabet Inc. (Google's parent company) and Facebook had a total of 74,505 employees. The combined market value of the two companies is twice that of Microsoft, but the workforce is one-third less. Currently, the combined market value of the top five technology companies in the United States (Apple, Alphabet, Microsoft, Facebook, and Oracle) is $1.8 trillion, 80% more than the market value of the top five technology companies in 2000 (Cisco, Intel, IBM, Oracle, and Microsoft), but the total number of employees is 22% less. The

Semiconductor Industry Association (SIA) pointed out that chips are still the third largest export item in the United States, second only to automobiles and aircraft. In 2001, the total number of employees in computer and electronics companies in the United States reached 1.87 million, which dropped to 1.03 million in August 2016. Take Micron as an example. In 2013, there were only 11,300 employees in the United States, down from 14,000 in 2000. At the same time, the number of employees outside the United States jumped from 4,800 to 19,600. Apple Inc. has 80,000 employees in the United States, accounting for two-thirds of the total, but half of its American employees are engaged in retail work. The

U.S. Bureau of Labor Statistics recently announced that the number of employees in the semiconductor and electronic component manufacturing industry decreased by 1,700 to 358,600 in September 2016, the lowest record since statistics began in 1985, and a 50% drop from the highest record in history (714,500 in January 2001).

(Source: FRED)

Appendix: Why EE has declined

The author recently participated in the "ICCAD2016" in Changsha. Wu, the general manager of a semiconductor company in China, joked in a chat with the media that "the semiconductor industry is not a job for people to do, to produce products for people to use." In view of the recent trend of EE to CS, does EE really have no future?

This question asks about the future of integrated circuits. So it must be divided into two sub-questions to answer.

Question 1: Is there a future for the development of the integrated circuit industry?

Question 2: If a person chooses the integrated circuit industry, does his personal development have a future (money)?

Short answer to question 1:

The development of the integrated circuit industry has entered a bottleneck period, or a slow development period. But in the long run, there is still great potential for development. After the next technological revolution, there may still be relatively rapid development.

Short answer to question 2:

For individuals, entering the integrated circuit industry is currently a high-investment but ordinary-return choice. The so-called good career development is to work for the leading giants in the industry. The possibility of successful entrepreneurship is very small, and it is difficult to become rich.

Long answer to question 1:

The integrated circuit industry is a miracle in the history of human industrial development. Since Gordon Moore proposed this law in 1965, countless scientists and engineers have allowed this exponential growth law to continue for nearly 50 years. Although the growth has slowed down in recent years, it still maintains exponential growth. The small transistor condenses almost all the essence of human natural science and engineering. Doubling in a short period of time is not uncommon, but the exponential growth that lasts for 50 years is difficult. In these 50 years, humans have achieved unprecedented growth in computing power. The figure below is the computing power growth curve obtained by humans at a cost of $1,000 per second over the past 100 years.


Microelectronics practitioners can be said to love and hate Moore's Law. Love it because this law tells everyone the direction of progress, that is, to continuously reduce costs and continuously improve performance, so that you can maintain competitiveness-in the business world, knowing which direction to move forward is more important than uncertainty about the direction of development. Hate it because this law binds everyone to a prisoner's dilemma, that is, if you cannot double the performance (cut costs by half) within two years (18 months in the early stage), then you will be defeated and eliminated by your competitors. The consequence of this is that electronic products will be reduced in price in a very short time after they are launched on the market. Everyone is used to the fact that electronic products must be reduced in price, and consumers are spoiled invisibly. Faced with this situation, manufacturers can only hope to obtain as much profit as possible in the early stage of the launch of new products, and then quickly invest funds in the research and development of the next generation of products, hoping to continue to lead in the next generation of products and thus have certain benefits. This approach worked for the first 40 years of Moore's Law, but when the process was reduced to 22nm, an important change occurred. As the R&D investment in new processes increased, the prices charged by foundries for new processes also increased. People discovered that the cost of a single transistor at 22nm was actually higher than at 28nm!

Although people can continue to make transistors smaller and their speed can still be increased, one of the statements of Moore's Law, "the cost of chips is reduced by half", has completely failed. What does this mean? It means that the path of chip manufacturers to reduce costs by pursuing new processes in the past forty years has been blocked. In the past, using new processes can not only bring performance improvements but also reduce costs, but after 22nm, manufacturers are faced with a choice, whether to spend a high cost to pursue new processes, or to be conservative and use old processes. At the same time, the cost of a newer process is getting more and more expensive, and many small and medium-sized manufacturers are already unable to do so. Only the giants in the industry have the capital to pursue more advanced processes. For example, the full layer mask price of the 22nm process when it first started mass production was about tens of millions of US dollars (I made it up), and tens of millions of dollars is a considerable investment even for a medium-sized fabless, not to mention the increase in the complexity of front-end and back-end design brought about by advanced processes, the increase in the cost of EDA tools, etc.

In order to cope with the rising R&D and operating costs, major companies have realized that the era of fighting alone and making a comeback is over, and the right choice to survive the winter is to join forces. Therefore, in 2015, there were more mergers and acquisitions in the integrated circuit industry than in the past six years combined, including the largest merger in the history of integrated circuits between Broadcom and Avago (more than 30 billion US dollars), Intel's acquisition of FPGA giant Altera, NXP's acquisition of Freescale, and other mergers and acquisitions that were unimaginable ten years ago. This is exactly the same as the law of industry integration in many traditional industries after entering the mature stage of development. In 2015, according to statistics from the Semiconductor Industry Association (SIA), the sales of the entire semiconductor industry fell by 0.2%, and the industry is expected to grow by only about 1% in 2016. And what was the GDP growth rate of the whole world in 2015? The IMF estimates it to be 3.1%. Yes, the semiconductor industry is already an industry that cannot even outperform the average GDP.

So where is the next growth point? Some people say it is the Internet of Things IoT, some say it is VR, and some say it is automotive electronics. I can't make a judgment. But it is obvious that in order for the entire semiconductor industry to develop rapidly again, it needs a broad market and irreplaceable demand similar to the smartphones of the past. As for connecting light bulbs and refrigerators to the Internet, and connecting cars to 4G, they cannot become a big climate.

But I personally still have confidence in the semiconductor industry, and this confidence comes from human pursuit of technology and convenient life. Back in the 1980s, many of the novel things in the future world imagined in the famous movie "Back to the Future" were realized in 2015, 30 years later, and even more awesome than what was imagined in the movie. Just like the demand for mobile phones was created, perhaps N years later, another demand will be created and become a part of our lives, and I believe that such demand must require the progress and support of semiconductors. This is my conclusion: in the long run, there is still great potential for development, and after the next technological revolution, there may still be relatively rapid development. The

long answer to question 2:

It is an indisputable fact that the current treatment of the hardware industry is not as good as that of the software industry. And with the integration of the industry, various companies laid off employees last year, and the market is full of experienced engineers. What I heard from school is that in many universities in the United States, EE students are turning to software, including famous schools like MIT. So the first conclusion is that for fresh graduates, there are fewer job opportunities than in previous years (China still has a relatively large demand due to national support), and there are fewer companies to choose from. After entering the company, there is also a certain risk of being laid off. The income level is lower than that of software, but it is still advantageous compared to other traditional industries such as machinery manufacturing and chemical industry.

In terms of career development after entering the company, it is difficult for hardware companies to expand as fast as software companies, so the salary increase is not high. In the United States, it is good if the salary increase can resist inflation. In addition, it is too difficult to

start a business in the chip industry now. The cost of tape-out is high, EDA tools are expensive, and VCs are not interested. As a result, the number of startups in the chip industry is far less than that in the software industry. A software startup may survive for two or three years after raising a few million dollars. In the chip industry, sorry, the license fee of EDA tools and the cost of tape-out are all spent. Therefore, more and more people have to stay in big companies, work hard for years, accumulate experience, and take the technical route of engineer->senior->staff-->principle engineer, or take the management route. If you want to get rich overnight like a software company goes public, I think the probability is not much different from winning the lottery.

As for investment, this industry is still a technology-intensive industry after all. A master's degree is a stepping stone to enter the industry, and the courses studied are not low in difficulty.

Finally, I would like to add two sentences. Many people argue about the difference between software and hardware. In fact, the difference is very obvious. https://zh.wikipedia.org/wiki/中国工业分类 Integrated

circuits belong to the secondary industry, which is the manufacturing industry, while software belongs to the tertiary industry, which is the service industry. If you understand this, many problems will become clear at a glance.

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