What (and where) is Silicon Valley?

Silicon Valley is a word that gets tossed around a lot. In the media it seems to be used as a catch-all term referring to the tech industry, referring to stock trends or start-ups. But what exactly is Silicon Valley? And where can you find it? Here is a brief history of this semi-mystical place and how it became such an important part of the technology world.

What is Silicon Valley?

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While Silicon Valley gets used as shorthand for many different aspects of the technology industry’s culture, it is a real area in Northern California. It once referred to the Santa Clara Valley south of San Francisco, although that area has expanded as the industry has grown.

Essentially, Silicon Valley refers to the technology industry in the San Francisco area. While many states in the United States, such as Washington and Texas, have booming tech industries, Silicon Valley has become such an important space because there are so many important companies near one another. These include Apple, Google, Intel, and many more.

It is also important to note that Silicon Valley is unique because of the massive concentration of wealth in the area. On "Forbes"’ list of the 10 most expensive zip codes in the United States, four of them are in Silicon Valley.

History of Silicon Valley

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The area between San Francisco and San Jose first got the name Silicon Valley because of Frederick Terman, the dean of engineering at Stanford University during the 1940s and 50s. Terman was a graduate of MIT and saw the close relationships that were fostered between graduates of East Coast engineering schools and the businesses that built the technologies that were developed in elite engineering programs.

Eager to emulate this model, Terman established the Stanford Industrial Park. This space was leased out to tenants such as Hewlett-Packard, Lockheed Martin, and General Electric, and became the first large-scale, high-tech manufacturing area in the United States. These early businesses and their massive successes laid the groundwork for the startup culture we know in Silicon Valley today.

Shifting focus in Silicon Valley

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Through the 1960s and 70s the semiconductor market did nothing but grow. The military needed more of them, as did NASA and the businesses that were beginning to use computers to process data. However, the biggest change, and the one that made Silicon Valley the place it is today, was the rise of the personal computer in the 1980s.

As personal computing became a bigger part of the average person’s life, the focus shifted from manufacturing electronics to creating computer software for consumers. By the 1990s, an average of 100 new companies were opened in Silicon Valley every year, and while many did not survive, some, such as Yahoo! and Sun Microsystems, left an important mark.

Silicon Valley today

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The technology industry took some hits during the crash in 2000 and was weakened by the recession of 2008-2009. However, it has come back strong every time. The area headquarters more than 30 "Fortune" 1000 companies and is home to massive campuses for Microsoft, Yahoo!, Apple, Facebook, and Hewlett-Packard, among others.

Today, Silicon Valley has grown well beyond the San Francisco area. The industry dominates the business world in Northern California and "Silicon Valley" refers to an area that stretches as far south as Monterey to Santa Cruz – roughly a two-hour drive from San Francisco.

So, if you are taking a trip down to San Francisco anytime soon and want to see where all your fancy gadgets get dreamed up, a stop in Silicon Valley might be an enlightening experience.