Out of work? Go to grad school.

The decline and fall of the Silicon Valley engineer?

Published February 14, 2006 11:50PM (EST)

Nothing gets engineers in Silicon Valley more riled than the prospect of losing their jobs to cheaper competition abroad. It is the hot-button issue, especially in the semiconductor industry, once the crown jewel of the Valley. So it's no big surprise that the topic of globalization was inescapable at last week's DesignCon conference in Santa Clara, Calif.

DesignCon bills itself as the "essential design engineering event" for semiconductor and electronic design engineers. That might seem like a narrow niche, but it goes to the heart of Silicon Valley's history, and it is an arena that both China and India are devoting tremendous resources to developing.

But judging by some of the coverage of panel discussions at the conference, engineers worried about their jobs got some tough love. During one panel discussion, speakers pointed the finger at the sorry state of math and science education in the United States. In another, panelists noted that engineers with advanced degrees were still in high demand. Out of work? Go back to school and learn some new skills.

Ed Sperling, the editor in chief of Electronic News, an industry trade magazine, moderated one of the panels. He summed up the issue in no-nonsense form last Friday, noting that he had received many letters since the panel and that "a common theme among the myriad comments is that engineers in the United States are toast."

While acknowledging that globalization and industry shifts "make it more difficult ... to earn a good wage and remain gainfully employed," he also stressed that in his view, it was not impossible.

The key, wrote Sperling, is education. "Globalization has done much to raise the minimum standard of education for engineers. The baseline for education in this market is higher than it was five years ago, and those engineers who are out of work or watching their prospects slide should consider retooling their credentials. More companies these days are hiring engineers with master's and doctorate degrees. If you're not keeping up with your education, you're not keeping up with the changes in the market and you're not managing your own best asset."

Sperling made two other points that are worth grappling with. One is the pressure exerted on all levels of the "food chain" by the "convergence of various markets such as communications, data and video into the consumer market." Global competition in the consumer electronics business is brutal, and engineering salaries have borne the brunt of the constant downward pressure on prices. So when you get right down to it, who is responsible for the crunch -- CEOs looking for cheaper labor, or customers at Best Buy looking for a bargain?

The other, perhaps more controversial suggestion is that "with labor costs [in the developing world] rising at a rate far greater than in developed areas of the world, it won't be long before there is relative parity around the globe."

This may already be happening. During one of the panels, Ahmad Bahai, chief technology officer at National Semiconductor Corp., observed that Indian engineers used to cost one-sixth of a comparable U.S. engineer. Now, it's closer to one-third.

"I am not suggesting it is going to be even anytime soon, but if it gets down to about one-half, it's no longer a no-brainer [to outsource]," Bahai was quoted as saying by EE Times.

Just how long "it won't be long" is is still a little vague, though, and advising out-of-work engineers to go back to school and pile on debt while struggling for a Ph.D. is unlikely to be greeted with a great deal of enthusiasm. No matter how you slice it, morale in Silicon Valley does not appear to be on the upswing.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works Silicon Valley