The decline of Silicon Valley

From Slashdot Story | Are Silicon Valley’s Glory Days Over?

It’s the manufacturing, stupid. (Score:5, Interesting)

by Animats (122034) on Friday February 12, @11:45PM (#31124396)
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First, bypassing the “story” and a layer of blogs, is the actual report [jointventure.org].

What’s really happened in Silicon Valley is that it’s been hollowed out. Silicon Valley used to be a major manufacturing center. San Jose once had the highest percentage of manufacturing employees of the major US cities, something like 54%. Today, the assembly plants are gone. Most of the fabs are gone. Much of the engineering is gone. This is what happens when you “outsource”. Eventually, everything moves to where the production is, including management and finance.

Part of the problem was the “dot com boom”, with its fake companies and fake prosperity. That caused a major change in the culture, away from engineering and towards marketing. When the bottom fell out of the dot-com boom, most of the marketing types left. The number of twentysomethings in San Francisco dropped by half. (A friend in the club business says “and the other half are working their butts off and don’t go out much.”) The big name in Silicon Valley now is not HP or Intel or IBM or National Semiconductor or Fairchild. It’s Google, which is an ad agency. That’s a huge change in emphasis.

The innovation culture is declining. Portola Valley (a rich suburb) used to have the highest percentage of patent holders of any US community. That’s dropped. There’s not that much exciting innovation going on. I go to venture capital meetings, and the ideas being presented are just not very exciting. (I’ve heard a pitch for a social network for cats. And that made it through two rounds of filtering before I heard it.)

People are still struggling to get semiconductor line widths down, solar fab costs down, and such. But that’s a grind. Mobile devices are not a fun area in which to work – the weight budget, the cost budget, the power budget, and the time budget are all very tight. The manufacturing is in Asia, anyway, and the engineering is going there. New areas aren’t
appearing.

There’s noise about “green tech”, but realistically, “green tech” is either vaporware, like the “smart grid”, silly, like small windmills, or something that requires massive manufacturing, like big windmills. Five years ago, the noise was about “biotech”, which doesn’t employ
many people.

Fewer young people in the US are going into engineering, and that’s a rational decision. It’s hard, it’s expensive to study, your job may be outsourced, and it’s now a low-status field. In 1970, lawyers and electrical engineers made about the same amount of money. That was a long time ago. On the other hand, in Asia, an EE degree puts you in the top few percent of the population in terms of income and status.

US government polices haven’t really had much of an effect one way or the other on Silicon Valley, except that allowing the runup in real estate increased living costs substantially and that free trade has made outsourcing so easy.

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