I grew up in Silicon Valley when it was primarily orchards and pastures. This area was known then as the ‘Valley of Heart’s Delight’ for its hundreds of cherry, apricot, pear, and peach orchards. I often took shortcuts through a cherry orchard to get to grammar school. The valley had large canneries where fruits were processed and canned daily. My childhood home was less than a mile from these canneries. I distinctly remember waking up on summer mornings to the aroma of cooking peaches and apricots as workers prepared these fragrant fruits for the market.
However, by the mid-1960s, as the Santa Clara Valley grew and urbanized, orchards gave way to new shopping centers, homes, and businesses. By the early 1970s, the last canneries had closed.
But in the late 50s and early 60s, another product started taking center stage in the valley, giving birth to the semiconductor industry. Thanks to significant work by Shockley Semiconductor, Fairchild, Intel, Hewlett Packard, and many more, this region became branded as Silicon Valley as semiconductor processor firms, the aerospace industry, and other high-tech companies built R&D centers, headquarters, and factories in this Northern California region.
In 1981, when IBM decided to use Intel’s 8088/8086 processors in their original IBM PC, Silicon Valley became the center of the PC industry and shifted its fortunes considerably. Soon, hundreds of tech companies settled in the valley, and tens of thousands of engineers and tech workers came to this area for jobs and, in many cases, to seek their fortunes.
Indeed, thanks to growing tech companies, startup stocks, and earning incentives, Silicon Valley has minted more millionaires than any other region in the world. Many knowledge workers joined startups and became millionaires as their companies went public.
As an analyst/tech historian, I have seen the valley grow, slow down, rebound, and sometimes change focus or direction. And, over the years, I have fielded worried questions about an impending death of Silicon Valley. Due to periods of challenging economic headwinds, some tech sectors’ slow growth and tech companies’ layoffs, it appears, to some, that Silicon Valley’s days are numbered.
Every decade or so, Silicon Valley reinvents itself. The semiconductor industry was the first, followed by the PC era and then by the internet. Next was the birth of social media, followed by the mobile era, led by smartphones. Before each new era, there was a period of massive layoffs and stagnation. Silicon Valley is constantly reinventing itself for the next groundbreaking technology that will once more re-energize tech and shift this region’s fortunes.
Last week, I had multiple calls from major media outlets about the current state of tech in Silicon Valley due to the significant layoffs in the previous month. In January alone, there were 25,000 layoffs by tech companies. And in 2023, across the world, there were approximately 260,000 tech jobs eliminated.
I told these reporters that many layoffs were due to over-hiring during the pandemic, especially in sales, support, and extra IT infrastructure staff needed to handle the millions working from home. Also, financial headwinds from inflation, resetting corporate priorities, and tighter budgeting going into an election year due to many uncertainties for the world economy.
While I understand these factors impacting tech jobs today, I also look at history and believe that Silicon Valley and tech are resetting for the next big things that will drive business and consumer demand shortly.
In a column I wrote last month entitled, “Three Technologies Driving the Next 25 Years of Computing” I suggested that AI, Quantum Computing and the Metaverse will be the most significant drivers in tech research, implementation, and demand.
The first one, AI, is at the center of Silicon Valley’s resetting as companies like Open AI, Google, Microsoft, Apple, Meta, and others are developing the underlying technologies and eventual applications to drive our AI future.
Hiring message boards reveals the high demand for prompt engineers, engineers, and programmers with AI skills and knowledge workers who are trained or even familiar with AI technology and tools.
There is also a high demand for engineers trained in Quantum Computing, and we are seeing a new demand for talent to tackle many engineering challenges for the VR, XR, and AR virtual worlds that are developing now.
As one who has chronicled Silicon Valley all my career and seen its ebbs and flows over the last 50 years, I am no longer surprised that this area continues to reset or reinvent itself.
With its push into AI processors, Nvidia is now an over 1 trillion dollar company. Apple is a 3 trillion dollar company. Intel is rebounding and about to drive a new era in PCs with their AI PC designs. When asked about the future of Silicon Valley, I look at its historical track record. I understand that innovating in semiconductors, software, applications, advanced computing and all things tech are in its DNA.
We are in a tough patch now with the layoffs and economic headwinds, but the leaders of Silicon Valley have invented the future in the past and are poised to do it again.