Suppose there is an engineering PhD student who is unsure whether to join academia or the industry after his PhD. He does not want to take chances and applies for internship positions during the course of his PhD. Here is a dilemma: the internship is certain to eat into vital amount of time he could otherwise spend thinking about his research problem. OTOH, when he is not fully into research, he is unlikely to get attractive research-based internship positions.
How should a PhD candidate time his internship in a way that it does not affect his research and is also a very valuable experience on his PhD resume?
Answer
This is a "Goldilocks" problem—you should try to schedule an internship late enough that you have enough experience to be of interest to a potential internship sponsor, but early enough so that it can have an effect on your long-term development (if you feel it was a sufficiently positive or negative experience to sway your sentiments).
As a result, I would say that you should typically do this in the middle of your PhD—probably around your third year or so (assuming that you're in a typical US graduate program that runs five to six years for a PhD). If you're in a European-style system, where the coursework has been done before the PhD starts, then it should be done somewhat earlier—perhaps from the middle of the second year on.
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