Timing an internship during PhD 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?
I think you're creating a false dichotomy by saying 


  the internship is certain to eat into vital amount of time he could
  otherwise spend thinking about research problems


Internships are places where sometimes REALLY interesting problems come up. Especially in engineering, while it's not critical, it's very important to keep a finger on what's happening in industry - the industry/academia divide is a matter of time-horizon rather than fundamental nature of the problem. 

Of course you need to have enough experience to recognize interesting problems, which goes back to @aeismail's answer. I will also say that doing it late in your career isn't that bad either, because then you get a three-month interview for a job. That's how I got my first one :)