Presentation to the 2018 Guangzhou Financial Roadshow to Global Bay Areas, Silicon Valley
Mountain View, California Mayor Lenny Siegel
May 16, 2018
Welcome to Silicon Valley.
Last year, when I spoke to another delegation from Guangzhou, I talked a little about the history of Silicon Valley. I was surprised to learn, after my presentation, that many of the Americans who work here in the Valley don’t know how and when the Valley got its nickname.
The transistor was invented at Bell Labs in New Jersey in 1947. Bell Labs leadership decided to share this transistor technology with other researchers and companies because Bell Labs and its parent AT&T—at the time the monopolistic American phone company—could benefit from advances made elsewhere. So during the 1950s they invited other scientists and engineers to Bell Labs to learn the new semiconductor technology first hand.
So when William Shockley, one of the three men credited with the invention of the transistor at Bell Labs, established Shockley Transistor not too far from here in Mountain View in 1956, he was able to draw upon that technology. Shockley was apparently difficult to work for, so eight of his youngest and brightest engineers left to form Fairchild Semiconductor, also in Mountain View, in 1957. For many years, just about every major chipmaker in Silicon Valley—including Intel, Advanced Micro Devices, and National Semiconductor—was formed by people who had worked at Fairchild or its spin-off firms. They all relied to some degree on the original technology from Bell Labs. You can learn about this at the Computer History Museum, also in Mountain View.
The semiconductor industry flourished here because Stanford University, just across El Camino Real from this hotel, had consciously created what its Engineering Dean, Frederick Terman, had called a “community of technical scholars.” Stanford had helped many of its engineering faculty and graduates form companies, many on Stanford-owned land in what is now called the Stanford Research Park. Hewlett-Packard was one of the first major companies created here, and it set a standard for horizontal management that is still practiced today in many local firms. The resulting critical mass of scientific talent attracted other tech companies, such as the Defense contractor, Lockheed Missiles and Space Company, to the area.
By the 1970s, the Santa Clara Valley was the world’s most important center of semiconductor design and production. Companies that produced semiconductor equipment and materials clustered here as well. In 1971, Electronics News documented the “Silicon Valley Family Tree” of industrial spin-offs, introducing the term Silicon Valley to the public at large. It used the term “Silicon” because the wafers—that is, thin smooth disks—from which micro-chips are made start out as pure silicon, made from sand.
Venture, or risk capitalists made a great deal of money by investing in these early firms, as well as computer-makers, such as Apple. Soon—with financing, engineering talent, and support services—it was possible for anyone with a bright idea to start up a new company here. Major companies based elsewhere set up shop here as well.
Mountain View’s largest company today is Google, also known as Alphabet. It was started by Stanford PhD students just twenty years ago. About a decade ago Google established its self-driving car project, headed by a former director of Stanford’s pathfinding Artificial Intelligence Laboratory. As a result, today at least 30 companies, including affiliates of Chinese-based businesses, are developing autonomous vehicle technology locally.
The primary lesson of this history is that technological development and economic success here derive from the fluidity of talent and the transfer of technology. But it’s not so simple. When people who move from one company to another take confidential intellectual property with them, they not only trigger lawsuits but they undermine the incentives that lead companies to innovate.
Today, with the growth of technology in China, Chinese immigrants and companies are an integral part of Silicon Valley. Many of the most sophisticated products of Silicon Valley—chips, phones, computers, etc.—are manufactured in China, and China represents a vast and growing market for our equipment and software.
Many of us consider this a “win-win” situation. Silicon Valley is thriving. China is modernizing and raising the standard of living of its huge population. But there are those in the U.S.—in places such as the White House—who consider the tech business a zero-sum game. They blame China for the hollowing out of American manufacturing, not realizing that what we previously called “services,” including software, creates enormous value and generates global revenues for the U.S. and its companies.
Furthermore, many more people in the U.S. believe that Chinese businesses are unfairly obtaining essential intellectual property from Silicon Valley, either through negotiated business deals or even outright theft. That feeds the suspicions of those who seek a trade war between our two countries.
It is essential that Silicon Valley and its counterparts in China establish a balanced, transparent relationship in which we contribute to each other’s growth. We must respect patents, licenses, and copyrights to encourage innovation, but we should also recognize that technology moves forward when people can move from company to company or even start up their own businesses.
I would like to take a minute to describe another, less known element of Silicon Valley’s history, a problem that I’ve been working on for four decades. The manufacture of electronic devices, particularly semiconductors, utilizes a vast range of hazardous substances. Back in the 1960s and 1970s, Fairchild Semiconductor, Intel, and other early chipmakers were not very careful about how they handled toxic substances and wastes.
In Mountain View and neighboring communities, they leaked and spilled cancer-causing chemicals such as trichloroethylene (TCE) into the subsurface. The birthplace of Silicon Valley became three Superfund sites in the 1980s. Superfund refers to the most contaminated properties in the U.S. This surprised a lot of people because chips are manufactured in “clean rooms” that are kept free of airborne particles; and computers, phones, and other devices are shiny and clean. Over the past few decades, companies have spent hundreds of millions of dollars remediating the groundwater and soil in several Silicon Valley cities, and in much of Mountain View the builders of new offices, homes, and other structures must install mitigation systems—similar to those used to prevent radon intrusion into buildings—to prevent the intrusion of TCE fumes from below.
Once again, we can all learn from history. In the early days of Silicon Valley, short-sighted environmental practices by some of the brightest engineers in the world created health and financial problems that remain with us today.
Silicon Valley’s experience is brief compared to China’s millennia of history, but I hope that while you are here you have the opportunity to learn from both our achievements and mistakes.
Welcome.