Chapter 69 Section 4 Silicon content continues to decrease

The reason why the San Francisco Bay Area is named Silicon Valley is because most of the companies here in the early days were semiconductor companies or computer hardware companies.Although the Hewlett-Packard company we introduced earlier cannot be regarded as a semiconductor company, it is a company mainly based on hardware such as computers and instruments, and can be regarded as a representative of mainstream companies in Silicon Valley in the early days.However, the first real semiconductor company born in Silicon Valley was Fairchild Semiconductor. Few people know Fairchild today, but it occupies a unique place in semiconductor history.Fairchild Semiconductor was founded by the famous "Traitorous Eight" in the history of technology who "defected" from Shockley Semiconductor.The most famous of them are Gordon Moore, the founder of Intel Corporation, the proposer of Moore's Theorem, and Robert Noyce, the inventor of the integrated circuit.Fairchild Semiconductor Corporation produced the world's first commercial semiconductor integrated circuit in the late 1950s. (Note: There is still controversy as to who was the first to invent the integrated circuit. Texas Instruments' patent is earlier than Fairchild's, but Fairchild is the first in the world to make a practical product) Although Fairchild is now The company has been in decline, but every computer user must know its two children-Intel and AMD.

Since Fairchild, many semiconductor companies have been born in the San Francisco Bay Area, including Intel, the largest semiconductor company in the world today, and the San Francisco Bay Area has since won the name of Silicon Valley.Until the 1980s, semiconductors and computer hardware were the pillar industries of Silicon Valley. Among them, famous semiconductor companies include National Semiconductor and Maxim, and there are countless small and medium-sized companies.Before the 1990s, the famous big companies in Silicon Valley were: HP, Intel, Sun, SGI, IBM (Almaden), Oracle (Oracle), Apple, 3Com, Seagate, AMD, National Semiconductor (National Semiconductor).Among them, only Oracle is a computer software and service-oriented company. IBM's Almaden laboratory is basically half software (DB2) and half hardware (storage equipment), and the rest are semiconductor companies or computer hardware companies.This period can be called the golden age of Silicon Valley semiconductor companies.

But after the 1990s, although the semiconductor industry in Silicon Valley is still developing and new semiconductor companies are still being born, the proportion of semiconductors in the Silicon Valley economy has been greatly reduced. After 2000, the largest companies in Silicon Valley were Cisco, Google, Intel, IBM, Oracle, Apple, HP, Yahoo, Genentech, and Ebay.Among them, Google, Yahoo, and Ebay are Internet companies. After IBM sold the storage device department to Hitachi, it is a pure software and service company in Almaden. Gene Technology is not an IT technology company at all, but the largest biopharmaceutical company in the world. company.None of them have anything to do with semiconductors.Even Intel has moved its factories to other states in the United States and overseas, and it has even gradually moved its research and development departments to low-cost Arizona and Oregon.After entering the 21st century, the status of Silicon Valley in the world economy and scientific research has continued unabated, and the share of semiconductors in the world economy is still increasing, but the core industries of Silicon Valley are getting farther and farther away from semiconductors.

There are two direct reasons for the decline of semiconductors in Silicon Valley. The first is the effect of anti-Moore's theorem.Since the price of semiconductors is halved every eighteen months, when a company develops a new chip, it cannot expect to increase profits as sales rise like a pharmaceutical company, because it does not take much time for the chip's profit to increase. It is so thin that it must be eliminated.The entire semiconductor industry is worrying about profit margins every day.From this perspective, it is difficult for the semiconductor industry to develop in the long-term in Silicon Valley, where the cost is high.As we mentioned earlier, Silicon Valley is a place that rejects mediocrity. When an industry's profit margins cannot sustain the high costs of Silicon Valley, it must move out of Silicon Valley.

The second is the "Made in Asia" effect. Since Silicon Valley took off by relying on semiconductors and computer hardware, it gathered many semiconductor and computer hardware experts and engineers in the 1970s.At the same time, it also promoted the development of the Electrical Engineering Department of Stanford University and Berkeley University.These people either ran out of the first generation of semiconductor companies such as Fairchild, or left Stanford and Berkeley to start the second round of semiconductor companies and computer hardware companies.Representatives include MIPS, Sun and SGI, which develop and manufacture RISC processors, as well as medium and large-scale companies such as LSI.Most of these companies are mainly founded by Americans.There are a large number of Asian engineers and executives in second-generation companies.They accumulated wealth and experience through the second round of semiconductor entrepreneurship, and some of them later became the mainstay of the world's third round of semiconductor company entrepreneurship.When a large number of Asian experts come out to start semiconductor and computer companies, it is easy for them to move the manufacturing and even the design department to East Asia, especially Taiwan, China, where the cost is much lower than that of the United States, and only keep the scientific research department in Silicon Valley.The most representative of this period includes Nvidia, the largest graphics card company in the world today.Its founder, Jensen Huang, was born in Taiwan, graduated from Stanford, worked for LSI and AMD, and then founded Nvidia.This is the most classic example of entrepreneurship in the Silicon Valley semiconductor era.When the hardware manufacturing industry moved to Taiwan, the overall profits of the semiconductor industry were greatly reduced, which changed the rules of the game for the semiconductor and computer hardware industries.As a result, the previous semiconductor companies moved their factories outside to meet the needs of competition.Later, everyone discovered that some low-end designs could also be made in Taiwan, and the silicon content in Silicon Valley became lower and lower.

Silicon Valley emerged from the semiconductor industry. Thirty years ago, Silicon Valley was synonymous with semiconductors.But now the proportion of the semiconductor industry in Silicon Valley is declining.Many cities in the world have sprung up because of one industry. For example, the Ruhr in Germany sprang up from coal mining and steelmaking, and Pittsburgh and Detroit in the United States developed respectively from the steel industry and the automobile industry. However, with the saturation and decline of these industries, corresponding The city also gradually declined.Twenty years ago, when semiconductor companies began to leave Silicon Valley, many people also doubted whether Silicon Valley would follow in the footsteps of Pittsburgh and Detroit one day. Didn't happen in Silicon Valley.In fact, Silicon Valley is more prosperous without semiconductors.

Silicon Valley is gone, so what's left?