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:
Additional notable companies headquartered (or with a significant presence) in Silicon Valley include (some defunct or subsumed):
- 3Com (acquired by HP)
- 8x8
- Actel
- Actuate Corporation
- Adaptec
- Aeria Games and Entertainment
- Akamai Technologies (HQ in Cambridge, Massachusetts)
- Altera
- Amazon.com's A9.com
- Amazon.com's Lab126.com
- Amdahl
- Aricent
- Asus
- Atari
- Atmel
- Broadcom (headquartered in Irvine, California)
- BEA Systems (acquired by Oracle Corporation)
- Cypress Semiconductor
- Dell (headquartered in Round Rock, Texas)
- EMC Corporation (headquartered in Hopkinton, Massachusetts)
- Extreme Networks
- E*TRADE (headquartered in New York, NY)
- Fairchild Semiconductor
- Foundry Networks
- Fujitsu (headquartered in Tokyo, Japan)
- Groupon (headquartered in Chicago, IL)
- Hitachi Data Systems
- Hitachi Global Storage Technologies
- IBM Almaden Research Center (headquartered in Armonk, New York)
- IDEO
- Informatica
- Intuitive Surgical
- Kerio Technologies
- LinkedIn
- Logitech
- Maxtor (acquired by Seagate)
- McAfee (acquired by Intel)
- Memorex (acquired by Imation and moved to Cerritos, California)
- Micron Technology (headquartered in Boise, Idaho)
- Microsoft (headquartered in Redmond, Washington)
- Mozilla Foundation
- Move, Inc.
- Nokia (headquartered in Espoo, Finland)
- Nokia Solutions and Networks (headquartered in Espoo, Finland)
- NXP Semiconductors
- Nook (subsidiary of Barnes & Noble)
- Olivetti (headquartered in Ivrea, Italy)
- Opera Software (headquartered in Oslo, Norway)
- OPPO
- Palm, Inc. (acquired by HP)
- Panasonic (headquartered in Osaka, Japan)
- PARC
- PayPal (it has been demerged from Ebay)
- Pixar
- Playdom
- PlayPhone
- Qualcomm, Inc. (HQ in San Diego, CA)
- Quanta Computer
- Quantcast
- Quora
- Rambus
- RSA (acquired by EMC)
- Samsung Electronics (headquartered in Suwon, Korea)
- SAP AG (headquartered in Walldorf, Germany)
- Siemens (headquartered in Berlin and Munich, Germany)
- Sony (headquartered in Tokyo, Japan)
- Sony Ericsson
- SRI International
- Sun Microsystems (acquired by Oracle Corporation)
- SunPower
- SurveyMonkey
- Synopsys Inc.
- Tata Consultancy Services (headquartered in Mumbai, India)
- Tibco Software
- Tesla Motors
- TiVo
- TSMC
- Twitter
- VA Software (Slashdot)
- VeriSign
- Veritas Software (acquired by Symantec)
- VMware
- WebEx (acquired by Cisco Systems)
- @WalmartLabs (acquired by Walmart Global eCommerce)
- YouTube (acquired by Google)
- Yelp, Inc.
- Zynga
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.