Computer and Electronic Products NAICS 334 Overview

Subsector Snapshot | Printable (PDF)

Fast Facts

Computer and electronic product manufacturing provided nearly 91,500 direct Texas jobs in 2016, as well as another 218,000 indirect jobs.
The subsector’s GDP totaled $28.6 billion in 2015.
Average annual wages in the subsector were $120,000 in 2016, more than double the statewide average of $54,000.
This subsector’s exports rose from $35.2 billion in 2008 to $47.1 billion in 2016, a 34 percent increase. Exports to Mexico alone nearly doubled during this period, from $13.5 billion to $26.0 billion, and accounted for more than half of this subsector’s exports in 2016.

Performance

Computer and electronic product manufacturing is by far the fastest-growing Texas manufacturing subsector in terms of economic activity. Its GDP increased by a staggering 584 percent from 1997 to 2015, for 11.3 percent average annual growth (the subsector experienced even greater economic expansion in the U.S. as a whole, with GDP rising by 680 percent). During this period, total Texas subsector employment declined by 38 percent (Exhibit 1).

Exhibit 1: Computer and Electronic Product Manufacturing – Real GDP and Employment Index in Texas, 1997-2015

Year	Real GDP	Employment
1997	0%	0%
1998	43%	12%
1999	42%	12%
2000	97%	16%
2001	96%	8%
2002	139%	-10%
2003	170%	-20%
2004	266%	-21%
2005	309%	-22%
2006	441%	-23%
2007	392%	-22%
2008	481%	-23%
2009	439%	-30%
2010	510%	-33%
2011	532%	-31%
2012	514%	-31%
2013	541%	-33%
2014	534%	-36%
2015	584%	-38%

Sources: Emsi, U.S. Bureau of Economic Analysis and Texas Comptroller of Public Accounts

Exhibit 2: Percent Employment Change in Computer and Electronic Product Manufacturing, U.S. vs. Texas, 1990-2016 (Indexed to 1990)

Year	U.S.	Texas
1990	0%	0%
1991	-5%	-2%
1992	-10%	-8%
1993	-13%	-8%
1994	-13%	-4%
1995	-11%	3%
1996	-8%	12%
1997	-5%	19%
1998	-4%	33%
1999	-6%	32%
2000	-4%	38%
2001	-8%	28%
2002	-21%	7%
2003	-29%	-5%
2004	-30%	-6%
2005	-31%	-8%
2006	-31%	-9%
2007	-33%	-7%
2008	-35%	-9%
2009	-40%	-17%
2010	-42%	-20%
2011	-42%	-18%
2012	-43%	-19%
2013	-44%	-21%
2014	-45%	-24%
2015	-45%	-26%
2016	-45%	-28%

Sources: Texas Workforce Commission and Texas Comptroller of Public Accounts

Long-Term Employment Trends

Computer and electronic product manufacturing jobs in Texas rose by 38 percent in the 1990s, peaking at nearly 174,000 jobs in 2000. Today Texas and U.S. employment in the subsector are down by 28 and 45 percent, respectively, from 1990 levels (Exhibit 2).

Several factors beyond the general productivity increases seen throughout manufacturing have contributed to this downturn. The electronics industry — and specifically semiconductor production — is very capital intensive and expensive. A new fabrication plant can cost more than $10 billion. Many nations offer tax incentives to lure such businesses; unfortunately, high corporate tax rates and low R&D tax credits prevent the U.S. from receiving more of these projects and, consequently, more manufacturing jobs. In addition, ever-changing technology requires companies to invest heavily in R&D — from 15 to 20 percent of gross sales on average. This combination of high upfront costs, lack of incentives and required R&D investments has compounded the decline in manufacturing employment.

Computer and Electronic Product Manufacturing Industries

Computer and electronic product manufacturing includes six industries, including manufacturers of computers and peripherals, semiconductors, audio and visual equipment and navigation equipment (Exhibit 3).

All six sectors are considered “advanced industries,” as defined by the Brookings Institution. Such industries have two distinguishing criteria: R&D spending per worker ranks in the top 20 percent of industries, and their share of workers with high levels of scientific and technical knowledge exceeds the national average. In 2015, advanced industries accounted for just 8.7 percent of total U.S. jobs, yet generated 60 percent of exports, 81 percent of patents and 89 percent of private sector R&D. Its emphasis on innovation and highly skilled workers makes advanced industries essential to growing prosperity and rising standards of living.

Industry Concentration in Texas

A common way to measure industry concentration is with location quotient (LQ), a measure of industry concentration in a given area in terms of employment: the higher the LQ value, the more concentrated the industry.

Texas’ computer and electronic product manufacturing LQ was 1.05 in 2016, meaning its share of the industry’s employment is 5 percent greater in Texas than in the U.S. (Exhibit 3). The computer and peripheral equipment manufacturing industry had the highest LQ of 1.52, indicating the industry’s employment share is 50 percent higher in Texas. The LQ values of communications equipment and semiconductor component manufacturing also are relatively high in Texas, despite a decline indicating the state lost some market share.

Exhibit 3: Industries Within Computer and Electronic Product Manufacturing

Description	NAICS Code	2016 Jobs	2001 to 2010 % Change	2010 to 2016 % Change	2016 Average Salaries	2001 Location Quotient	2016 Location Quotient
Computer and Peripheral Equipment	3341	20,824	-45%	27%	$133,936	1.43	1.52
Communications Equipment	3342	10,342	-62%	-12%	$130,557	1.86	1.44
Audio and Video Equipment	3343	732	-50%	20%	$86,977	0.36	0.45
Semiconductor and Other Electronic Components	3344	38,721	-42%	-7%	$125,092	1.56	1.27
Navigational, Measuring, Electromedical and Control Instruments	3345	20,020	5%	-13%	$93,411	0.64	0.61
Manufacturing and Reproducing Magnetic and Optical Media	3346	833	-47%	-32%	$114,609	0.52	0.65
Computer and Electronic Product Total	334	91,472	-40%	-3%	$120,389	1.26	1.05

Sources: Emsi and Texas Comptroller of Public Accounts

Service-Related Industries

As computer and electronic manufacturing employment has declined, high-paying service-related jobs in high tech and information technology have taken their place. The computer systems design and related services industry, for instance, added about 64,000 Texas jobs between 2010 and 2016, a gain of 63 percent (Exhibit 4).

Exhibit 4: Total Employment, Computer and Electronic Product Manufacturing vs. Computer Systems Design and Related Services,
1990-2016

Year	Product Manufacturing	Systems Design and Related Services
1990	126,200	19,600
1991	123,800	21,200
1992	116,200	22,600
1993	116,500	26,000
1994	121,200	29,900
1995	130,000	35,000
1996	140,800	42,800
1997	149,900	51,500
1998	167,400	62,800
1999	167,200	73,200
2000	173,900	84,900
2001	162,000	84,700
2002	134,500	74,300
2003	120,200	70,300
2004	118,000	73,600
2005	116,300	77,600
2006	115,000	84,100
2007	117,300	92,700
2008	114,800	101,500
2009	104,600	98,000
2010	100,600	101,400
2011	103,300	110,200
2012	102,800	123,400
2013	100,100	133,800
2014	96,000	147,400
2015	92,800	159,800
2016	90,700	165,400

Sources: Texas Workforce Commission and Texas Comptroller of Public Accounts

Conclusion

Manufacturing is an important part of the Texas economy, driving innovation and providing thousands of jobs with high wages. While the industry’s employment has declined over the last 20 years, its contribution to Texas GDP has increased — nearly double the industry’s contribution to U.S. GDP and exceeding growth in Texas’ total GDP by 15 percent. In 2015, Texas accounted for 10.2 percent of the nation’s manufacturing GDP.

Computer and electronic products accounted for $47.1 billion in exports in 2016, second only to chemical manufacturing. The subsector supports 91,472 direct Texas jobs with average annual wages of $120,389.

Computer and peripheral equipment, communications equipment and semiconductor and other electronic components (NAICS codes 3341, 3342 and 3344, respectively) have a high Texas LQ for both manufacturing and services. The subsector is concentrated in Texas compared to other states, yet Texas may be losing market share, considering that LQ values declined from 2001 through 2016. Computer and electronic products (334) is a cornerstone of Texas manufacturing, particularly in the Austin-Round Rock and Dallas-Fort Worth-Arlington metro areas.

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