Recession cloud has solar lining in Silicon ValleyJanuary 29th, 2009 - 11:28 am ICT by IANS
San Francisco, Jan 29 (DPA) Microsoft is laying off 5,000 workers, Intel is closing five fabrication plants, and even mighty, can-do-no-wrong Google is slashing perks and laying off recruiters.But for a Silicon Valley steeled by the 2001 dot-com bust, a recession that could be the longest and deepest in 80 years is not causing panic or prophecies of doom.
Instead, the current troubles are seen as yet another phase of creative destruction in the boom and bust cycle that has characterised the region ever since it started its transformation in the middle of the 20th century from a valley of orange groves into a global technological hot-bed.
That history is based on a ruthless dedication to innovation, a relentless belief in the transformative power of technology, a talent pool that draws brilliant people from around the world and a venture-capital system that fosters thousands of start-up companies in the hope that just a handful of them will eventually strike gold.
The system proved itself in the aftermath of the dot-com bust, which saw thousands of companies bite the dust, and prompted some 200,000 layoffs in the region between San Jose and San Francisco.
Out out of the multibillion-dollar ruins of businesses like Pets.com sprang the behemoth that is Google, not to mention such trailblazers as YouTube and MySpace. Last year, the region lost 11,700 tech jobs, and thousands more layoffs have been announced just this month, with the local unemployment rate already at 7.8 percent.
“It is a very severe cycle, but it’s not a business model gone bad,” said Stephen Levy of the Centre for Continuing Study of the California Economy. “It’s a loss of wealth, a decline in consumer spending and the general caution. It’s really different from 2000, when Silicon Valley was leading the recession because all those companies had gone bankrupt.”
As it prepares for a new phase of growth, Silicon Valley is looking further afield than the Internet. Its goal is to become the vanguard of green innovation in the United States and around the world.
One only has to cruise the freeways to see the results of the $3.3 billion that US venture capitalists invested last year in green energy startups - with more than 60 percent of the cash coming to Silicon Valley. Investments like a $300 million bet on startup NanoSolar or a $90 million injection into Solyndra, another solar energy firm, have already produced a relative boom in alternative energy employment in Silicon Valley, making it the epicentre of thin-film solar cells, which could revolutionise the way solar energy is produced.
Even as Intel closes its last chip factory in Silicon Valley, clean technology innovation is sprouting new manufacturing in the birthplace of the semiconductor, after a long trend of production outsourcing to Asia.
But not all is well, as the credit crisis in the broader economy has dried up venture capital and impeded the huge investments needed for major alternative-energy projects.
Hopes are high, however, that a gargantuan federal stimulus package will change this dynamic.
Details of the stimulus are yet to be worked out. But there is little doubt that new President Barack Obama’s administration intends to act against climate change, and the development of alternative energies will help Silicon Valley catch up and possibly overtake rivals in Europe and Asia, where government incentives have fuelled advances.
“Weakened capital markets and low demand will continue to constrain new project investment in 2009,” says Alex Klein, research director at Emerging Energy Research. “But the fundamentals for a significant transformation in energy infrastructure - and the corresponding investment opportunity - over the long term remain sound.”
For now, however, the transformation is painful.
Every day, the papers are filled with stories of people losing their jobs and their homes, car dealers going out of business, companies struggling to pay workers and city and state governments facing huge deficits.
The economic disruption has had a life-changing impact on folks like Concepcion Urias, who owns a small Mexican eatery just down the road from the headquarters of Internet retailing giant eBay. The business slowdown forced her to cut hours for her two employees, just as rent went up on her humble restaurant, and her loan payments on her home are set to rise.
“I saved my money for years because I always wanted to own my own restaurant,” said Urias, 47, who came to the United States in 1977 from Mexico. “This restaurant was my dream. But now I’m not sure what to do to save it.”
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- China's first bank for technological innovation opens - Aug 16, 2012
- India's first telecom business incubator in Kerala - Oct 27, 2011
- BlackBerry makers to set up innovation zone in Kochi - May 30, 2012
- Intel to invest $100 mn in car technology innovation - Mar 01, 2012
- Israel to host industry meet to woo Indian investments - Jan 16, 2011
- Tata Power to buy remaining 51 percent stake in Tata BP Solar - Dec 27, 2011
- Huge potential seen in US-India business ties - Apr 29, 2012
- US-India business summit sees huge potential (Lead, changing dateline) - Apr 29, 2012
- Intel Capital invests $200 million in six Indian firms - Sep 30, 2011
- Kerala: Industry majors to support IT product start-ups village - Jul 23, 2012
- Facing biggest slump since 2002, Silicon Valley firms eye India - Apr 15, 2009
- Indian Angel Network to mentor Kochi start-ups - Aug 31, 2012
- India's first Startup Village at Kochi - Jan 18, 2012
- IBM to provide start-ups cloud-computing technology - Mar 31, 2010