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Silicon Valley, as seen from over north San Jose, facing southbound towards Downtown San Jose

Downtown San Jose as seen with lit palm trees

Silicon Valley is a nickname for the southern portion of the San Francisco Bay Area of Northern California in the United States. It is home to many of the world's largest high tech corporations, as well as thousands of tech startup companies. The region occupies roughly the same area as the Santa Clara Valley where it is centered, including San Jose and surrounding cities and towns. The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all high-tech businesses in the area, and is now generally used as a metonym for the American high-technology economic sector.

Silicon Valley is a leading hub for high-tech innovation and development, accounting for one-third of all of the venture capital investment in the United States. Geographically, Silicon Valley is generally thought to encompass all of the Santa Clara Valley, the southern San Francisco Peninsula, and southern portions of the East Bay.

Origin of the term

The term Silicon Valley is attributed to Ralph Vaerst, a local entrepreneur. Its first published use is credited to Don Hoefler, a friend of Vaerst's, who used the phrase as the title of a series of articles in the weekly trade newspaper Electronic News. The series, entitled "Silicon Valley in the USA", began in the paper's January 11, 1971 issue. The term gained widespread use in the early 1980s, at the time of the introduction of the IBM PC and numerous related hardware and software products to the consumer market. The Silicon part of the name refers to the high concentration of companies involved in the making of semiconductors (silicon is used to create most semiconductors commercially) and computer industries that were concentrated in the area. These firms slowly replaced the orchards and related agriculture and food production companies which gave the area its initial nickname — the "Valley of Heart's Delight."

History

"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."[1]

Background


Looking west over northern San Jose (downtown is at far left) and other parts of Silicon Valley
Stanford University, its affiliates, and graduates have played a major role in the development of this area.[2] 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.[3]

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".[4]

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, California. Shockley's work served as the basis for many electronic developments for decades.[5][6]

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.[7]

Social roots of the information technology revolution

It was in Silicon 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.[8] Silicon Valley was formed as a milieu of innovations by the convergence on one site of new technological knowledge; a large pool of skilled engineers and scientists from major universities in the area; generous funding from an assured market with the Defense Department; the development of an efficient network of venture capital firms; and, in the very early stage, the institutional leadership of Stanford University.[9]

Roots in radio and military technology

The first ship-to-shore wireless telegraph message to be received in the US was from the San Francisco lightship outside the Golden Gate, signaling the return of the American fleet from the Philippines after their victory in the Spanish–American War. The ship had been outfitted with a wireless telegraph transmitter by a local newspaper, so that they could prepare a celebration on the return of the American sailors.[10]

The Bay Area had long been a major site of United States Navy research and technology. In 1909, Charles Herrold started the first radio station in the United States with regularly scheduled programming in San Jose. Later that year, Stanford University graduate Cyril Elwell purchased the U.S. patents for Poulsen arc radio transmission technology and founded the Federal Telegraph Corporation (FTC) in Palo Alto. Over the next decade, the FTC created the world's first global radio communication system, and signed a contract with the Navy in 1912.[1]

In 1933, Air Base Sunnyvale, California, was commissioned by the United States Government for use as a Naval Air Station (NAS) to house the airship USS Macon in Hangar One. The station was renamed NAS Moffett Field, and between 1933 and 1947, U.S. Navy blimps were based there.[11] A number of technology firms had set up shop in the area around Moffett Field to serve the Navy. When the Navy gave up its airship ambitions and moved most of its west coast operations to San Diego, the National Advisory Committee for Aeronautics (NACA, forerunner of NASA) took over portions of Moffett Field for aeronautics research. Many of the original companies stayed, while new ones moved in. The immediate area was soon filled with aerospace firms, such as Lockheed.

Ham radio

The Bay area was an early center of ham radio with about 10% of the operators in the United States. William Eitel, Jack McCullough, and Charles Litton, who together pioneered vacuum tube manufacturing in the Bay area, were hobbyists with training in technology gained locally who participated in development of shortwave radio by the ham radio hobby. High frequency, and especially, Very high frequency, VHF, transmission in the 10 meter band, required higher quality power tubes than were manufactured by the consortium of RCA, Western Electric, General Electric, Westinghouse which controlled vacuum tube manufacture. Litton, founder of Litton Industries, pioneered manufacturing techniques which resulted in award of wartime contracts to manufacture transmitting tubes for radar to Eitel-McCullough, a San Bruno firm, which manufactured power-grid tubes for radio amateurs and aircraft radio equipment.[12]

Sputnik

On October 4, 1957 the Soviet Union launched the first space satellite, Sputnik, which sparked fear that the Soviet Union was pulling ahead technologically. After President Eisenhower signed the National Aeronautics and Space Act (NASA), he turned to the only company in the world who were able to make transistors: Fairchild Semiconductor. The president funded their project. They were highly successful and their company was put on the map.[13]

Welfare capitalism

A union organizing drive in 1939-40 at Eitel-McCullough by the strong Bay area labor movement was fought off by adoption of a strategy of welfare capitalism which included pensions and other generous benefits, profit sharing, and such extras as a medical clinic and a cafeteria. An atmosphere of cooperation and collaboration was established,[14] Successes have been few and far between[15] for union organizing drives by UE and others in subsequent years.[16]

Stanford Industrial Park

After World War II, universities were experiencing enormous demand due to returning students. To address the financial demands of Stanford's growth requirements, and to provide local employment opportunities for graduating students, Frederick Terman proposed the leasing of Stanford's lands for use as an office park, named the Stanford Industrial Park (later Stanford Research Park). Leases were limited to high technology companies. Its first tenant was Varian Associates, founded by Stanford alumni in the 1930s to build military radar components. However, Terman also found venture capital for civilian technology start-ups. One of the major success stories was Hewlett-Packard. Founded in Packard's garage by Stanford graduates William Hewlett and David Packard, Hewlett-Packard moved its offices into the Stanford Research Park shortly after 1953. In 1954, Stanford created the Honors Cooperative Program to allow full-time employees of the companies to pursue graduate degrees from the University on a part-time basis. The initial companies signed five-year agreements in which they would pay double the tuition for each student in order to cover the costs. Hewlett-Packard has become the largest personal computer manufacturer in the world, and transformed the home printing market when it released the first thermal drop-on-demand ink jet printer in 1984.[17] Other early tenants included Eastman Kodak, General Electric, and Lockheed.[18]

The silicon transistor

In 1953, William Shockley left Bell Labs in a disagreement over the handling of the invention of the transistor. After returning to California Institute of Technology for a short while, Shockley moved to Mountain View, California, in 1956, and founded Shockley Semiconductor Laboratory. Unlike many other researchers who used germanium as the semiconductor material, Shockley believed that silicon was the better material for making transistors. Shockley intended to replace the current transistor with a new three-element design (today known as the Shockley diode), but the design was considerably more difficult to build than the "simple" transistor. In 1957, Shockley decided to end research on the silicon transistor. As a result of Shockley's abusive management style, eight engineers left the company to form Fairchild Semiconductor; Shockley referred to them as the "traitorous eight".
Two of the original employees of Fairchild Semiconductor, Robert Noyce and Gordon Moore, would go on to found Intel.[19][20]

Chips

In April 1974 Intel released the Intel 8080,[21] a "computer on a chip," "the first truly usable microprocessor." A microprocessor incorporates the functions of a computer's central processing unit (CPU) on a single integrated circuit (IC),[22]

Law firms

The rise of Silicon Valley was also bolstered by the development of appropriate legal infrastructure to support the rapid formation, funding, and expansion of high-tech companies, as well as the development of a critical mass of litigators and judges experienced in resolving disputes between such firms. From the early 1980s onward, many national (and later international) law firms opened offices in San Francisco and Palo Alto in order to provide Silicon Valley startups with legal services. Furthermore, California law has a number of quirks which help entrepreneurs establish startups at the expense of established firms, such as a nearly absolute ban on non-compete clauses in employment agreements.[citation needed]

Homebrew Computer Club


Invitation to first Homebrew Computer Club meeting (sent to Steve Dompier).

The Homebrew Computer Club was an informal group of electronic enthusiasts and technically minded hobbyists who gathered to trade parts, circuits, and information pertaining to DIY construction of computing devices.[23] It was started by Gordon French and Fred Moore who met at the Community Computer Center in Menlo Park. They both were interested in maintaining a regular, open forum for people to get together to work on making computers more accessible to everyone.[24]

The first meeting was held in March 1975 in French's garage in Menlo Park, San Mateo County, California, on the occasion of the arrival in the area of the first MITS Altair microcomputer, a unit sent for review by People's Computer Company. Steve Wozniak credits that first meeting with inspiring him to design the Apple I.[25] Subsequent meetings were held at an auditorium at the Stanford Linear Accelerator Center.[26]

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.

Media

In 1980 Intelligent Machines Journal, a hobbyist journal, changed its name to InfoWorld, and, with offices in Palo Alto, began covering the explosive emergence of the microcomputer industry in the valley.[27]

Software

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.[28] Cisco's impetus stemmed from the need to route a variety of protocols over Stanford's campus Ethernet.

Internet bubble

Silicon Valley is generally considered to have been the center of the dot-com bubble, which started in the mid-1990s and collapsed after the NASDAQ stock market began to decline dramatically in April 2000. During the bubble era, real estate prices reached unprecedented levels. For a brief time, Sand Hill Road was home to the most expensive commercial real estate in the world, and the booming economy resulted in severe traffic congestion.

After the dot-com crash, Silicon Valley continues to maintain its status as one of the top research and development centers in the world. A 2006 The Wall Street Journal story found that 12 of the 20 most inventive towns in America were in California, and 10 of those were in Silicon Valley.[29] San Jose led the list with 3,867 utility patents filed in 2005, and number two was Sunnyvale, at 1,881 utility patents.[30]

Economy

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.[31] 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.[32]

The region is the biggest high-tech manufacturing center in the United States.[33][34] The unemployment rate of the region was 9.4% in January 2009, up from 7.8% in the previous month.[35] Silicon Valley received 41% of all U.S. venture investment in 2011, and 46% in 2012.[36]

Notable companies

Thousands of high technology companies are headquartered in Silicon Valley. Among those, the following are in the Fortune 1000:

Adobe Systems

Advanced Micro Devices (AMD)

Apple Inc.

Cisco Systems

eBay

Intel

Intuit

Nvidia

Oracle

Sun Microsystems

Yahoo!
Additional notable companies headquartered (or with a significant presence) in Silicon Valley include (some defunct or subsumed):
Silicon Valley is also home to the high-tech superstore retail chain Fry's Electronics.

Notable government facilities

Demographics

Depending on what geographic regions are included in the meaning of the term, the population of Silicon Valley is between 3.5 and 4 million. A 1999 study by AnnaLee Saxenian for the Public Policy Institute of California reported that a third of Silicon Valley scientists and engineers were immigrants and that nearly a quarter of Silicon Valley's high-technology firms since 1980 were run by Chinese (17 percent) or Indian CEOs (7 percent).[37]

Diversity

According to 2014 article in the Washington Post, a case was presented for the imbalance in the ratio of women to men in leadership and technical positions in Silicon Valley firms.[38] The article states that although there are roughly equal numbers of men and women working in the tech industry, few women achieve leadership positions. This is also represented in the number of new companies founded by women as well as the number of women lead startups that receive venture capital funding. The author of the article, Vivek Wadhwa, stated that he believed that a contributing cause of this phenomenon was upbringing and parental influence. He stated, "...very few parents encourage their daughters to study science and engineering."[39] Vivak also cited the lack of female role models and noted that many famous tech leaders — Apple’s Steve Jobs, Microsoft’s Bill Gates, and Facebook’s Mark Zuckerberg — are male.[38]

As of 2014, in response to gender imbalance in their technical workforce, Silicon Valley firms such as Apple were working actively to prepare and recruit women. Bloomberg reported in October that Facebook, Google, and Microsoft attended the 20th annual Grace Hopper 'Women in Computing' conference to actively recruit and potentially hire female engineers and technology experts.[40]

Starting in May 2014, tech companies such as Google, Facebook, and Apple started to release corporate transparency reports and offer detailed employee breakdowns.[40] Facebook found that 77% of its senior-level employees were men and 74% were white. Overall, 41% of its employees were of Asian origin, while 2% of employees were black.[41] At Google, 17% of employees are women, and 72% of leadership positions are held by whites (Hispanic and Non-Hispanic).[42] These findings brought criticism by some for their low employment of female and black employees, compared to the over-representation of Asian-American employees compared to the national population, where 5% is of Asian descent.[43][44]

Municipalities

The following Santa Clara County cities are actually located in the Santa Clara Valley and based on that status are traditionally considered to be in Silicon Valley (in alphabetical order):
In 2015, MIT researchers developed a novel method for measuring which towns are home to startups with higher growth potential. This defines Silicon Valley to center on the municipalities of Menlo Park, Mountain View, Palo Alto, and Sunnyvale.[45][46]

The following Bay Area cities are (or were) home to various high-tech companies (or related firms like venture capital firms) and have thereby become associated with Silicon Valley:

Universities, colleges, and trade schools

Media outlets

Local and national media cover Silicon Valley and its companies. CNN, The Wall Street Journal, and Bloomberg News operate Silicon Valley bureaus out of Palo Alto. Public broadcaster KQED (TV) and KQED-FM, as well as the Bay Area's local ABC station KGO-TV, operate bureaus in San Jose. KNTV, NBC's local Bay Area affiliate "NBC Bay Area", is located in San Jose. Produced from this location is the nationally distributed TV Show "Tech Now" as well as the CNBC Silicon Valley bureau. San Jose-based media serving Silicon Valley include the San Jose Mercury News daily and the Metro Silicon Valley weekly. Specialty media include El Observador and the San Jose / Silicon Valley Business Journal. Most of the Bay Area's other major TV stations, newspapers, and media operate in San Francisco or Oakland. Patch.com operates paloalto.patch.com, mountainview.patch.com and others, providing local news, discussion and events for residents of Silicon Valley.