Silicon Valley is a nickname for the southern portion of the San Francisco Bay Area, which is located in the part of the U.S. state of California known as Northern California. It is home to many of the world’s largest high-tech corporations and thousands of startup companies. Geographically, it encompasses all of the Santa Clara Valley, the southern half of the San Francisco Peninsula, and southern portions of the East Bay. It includes parts or most of Santa Clara County, San Mateo County, and Alameda County.
The word “valley” refers to the Santa Clara Valley, where the region has traditionally been centered, which includes the city of San Jose and surrounding cities and towns. The word “silicon” originally referred to the large number of silicon chip innovators and manufacturers in the region. The term “Silicon Valley” eventually came to refer to all high tech businesses in the area, and is now generally used as a synecdoche for the American high-technology economic sector. It also became a global synonym for leading high-tech research and enterprises, and thus inspired similar named locations, as well as research parks and technology centers with a comparable structure all around the world.
Silicon Valley is a leading hub and startup ecosystem for high-tech innovation and development, accounting for one-third of all of the venture capital investment in the United States. It was in the Valley that the silicon-based integrated circuit, the microprocessor, and the microcomputer, among other key technologies, were developed. As of 2013, the region employed about a quarter of a million information technology workers.
“Perhaps the strongest thread that runs through the Valley’s past and present is the drive to ‘play’ with novel technology, which, when bolstered by an advanced engineering degree and channeled by astute management, has done much to create the industrial powerhouse we see in the Valley today.” (Timothy J. Sturgeon)
Stanford University, its affiliates, and graduates have played a major role in the development of this area. Some examples include the work of Lee De Forest with his invention of a pioneering vacuum tube called the Audion and the oscilloscopes of Hewlett-Packard.
A very powerful sense of regional solidarity accompanied the rise of Silicon Valley. From the 1890s, Stanford University’s leaders saw its mission as service to the West and shaped the school accordingly. At the same time, the perceived exploitation of the West at the hands of eastern interests fueled booster-like attempts to build self-sufficient indigenous local industry. Thus, regionalism helped align Stanford’s interests with those of the area’s high-tech firms for the first fifty years of Silicon Valley’s development.
During the 1940s and 1950s, Frederick Terman, as Stanford’s dean of engineering and provost, encouraged faculty and graduates to start their own companies. He is credited with nurturing Hewlett-Packard, Varian Associates, and other high-tech firms, until what would become Silicon Valley grew up around the Stanford campus. Terman is often called “the father of Silicon Valley“.
In 1956 William Shockley, the creator of the transistor, moved from New Jersey to Mountain View, California, to start Shockley Semiconductor Laboratory to live closer to his ailing mother in Palo Alto. Shockley’s work served as the basis for many electronic developments for decades.
During 1955–85, solid state technology research and development at Stanford University followed three waves of industrial innovation made possible by support from private corporations, mainly Bell Telephone Laboratories, Shockley Semiconductor, Fairchild Semiconductor, and Xerox PARC. In 1969, the Stanford Research Institute (now SRI International), operated one of the four original nodes that comprised ARPANET, predecessor to the Internet.
Venture capital firms
By the early 1970s, there were many semiconductor companies in the area, computer firms using their devices, and programming and service companies serving both. Industrial space was plentiful and housing was still inexpensive. The growth was fueled by the emergence of the venture capital industry on Sand Hill Road, beginning with Kleiner Perkins in 1972; the availability of venture capital exploded after the successful $1.3 billion IPO of Apple Computer in December 1980.
Although semiconductors are still a major component of the area’s economy, Silicon Valley has been most famous in recent years for innovations in software and Internet services. Silicon Valley has significantly influenced computer operating systems, software, and user interfaces.
Using money from NASA, the US Air Force, and ARPA, Doug Engelbart invented the mouse and hypertext-based collaboration tools in the mid-1960s and 1970s while at Stanford Research Institute (now SRI International), first publicly demonstrated in 1968 in what is now known as The Mother of All Demos. Engelbart’s Augmentation Research Center at SRI was also involved in launching the ARPANET (precursor to the Internet) and starting the Network Information Center (now InterNIC). Xerox hired some of Engelbart’s best researchers beginning in the early 1970s. In turn, in the 1970s and 1980s, Xerox’s Palo Alto Research Center (PARC) played a pivotal role in object-oriented programming, graphical user interfaces (GUIs), Ethernet, PostScript, and laser printers.
While Xerox marketed equipment using its technologies, for the most part its technologies flourished elsewhere. The diaspora of Xerox inventions led directly to 3Com and Adobe Systems, and indirectly to Cisco, Apple Computer, and Microsoft. Apple’s Macintosh GUI was largely a result of Steve Jobs‘ visit to PARC and the subsequent hiring of key personnel. Cisco’s impetus stemmed from the need to route a variety of protocols over Stanford’s campus Ethernet.
Silicon Valley has a social and business ethos that supports innovation and entrepreneurship. Attempts to create “Silicon Valleys” in environments where disruptive innovation does not go over well have a poor track record.
According to a 2008 study by AeA in 2006, Silicon Valley was the third largest high-tech center (cybercity) in the United States, behind the New York metropolitan area and Washington metropolitan area, with 225,300 high-tech jobs. The Bay Area as a whole however, of which Silicon Valley is a part, would rank first with 387,000 high-tech jobs. Silicon Valley has the highest concentration of high-tech workers of any metropolitan area, with 285.9 out of every 1,000 private-sector workers. Silicon Valley has the highest average high-tech salary at $144,800. Largely a result of the high technology sector, the San Jose-Sunnyvale-Santa Clara, CA Metropolitan Statistical Area has the most millionaires and the most billionaires in the United States per capita.
The region is the biggest high-tech manufacturing center in the United States. The unemployment rate of the region was 9.4% in January 2009, up from 7.8% in the previous month. Silicon Valley received 41% of all U.S. venture investment in 2011, and 46% in 2012.
Manufacture of transistors is, or was, the core industry in Silicon Valley. The production workforce was for the most part composed of Asian and Latina immigrants who were paid low wages and worked in hazardous conditions due to the chemicals used in the manufacture of integrated circuits. Technical, engineering, design, and administrative staffs were in large part well compensated.
Many more jobs (400,000 during the period 2010 to 2015) are created in Silicon Valley than housing built (60,000 units during the period 2010 to 2015). Housing prices are extremely high, far out of the range of production workers. As of 2016 a two-bedroom apartment rented for about $2,500 while the median home price was about $1 million.Homelessness is a problem with housing beyond the reach of middle-income residents; there is little shelter space other than in San Jose which, as of 2015, was making an effort to develop shelters by renovating old hotels.
- Adobe Systems
- Advanced Micro Devices (AMD)
- Agilent Technologies
- Alphabet Inc.
- Apple Inc.
- Applied Materials
- Brocade Communications Systems
- Cisco Systems
- Electronic Arts
- Hewlett Packard Enterprise
- HP Inc.
- Juniper Networks
- KLA Tencor
- Lam Research
- Lockheed Martin
- LSI Logic
- Marvell Semiconductors
- Maxim Integrated Products
- National Semiconductor
- Oracle Corporation
- Riverbed Technology
- Tesla Motors
- Visa Inc.
- Western Digital Corporation