For decades, metropolitan regions all over the world and their respective governments have unleashed numerous initiatives to remake themselves to be the “next Silicon Valley.” Within the U.S., labels such as Silicon Alley, Silicon Beach, Silicon Bayou, Silicon Desert, Silicon Hills, Silicon Holler, Silicon Peach, Silicon Prairie, Silicon Shire, Silicon Slopes and so on have come, and gone. Overseas, there are Silicon Wadi (Israel) and Silicon Roundabout (East London), as well as frequent questions about whether Singapore, Taiwan, or India is the real Silicon Valley of Asia. In China, Zhongguancun in Beijing, as well as the southern city of Shenzhen, vying to be the equivalents of Silicon Valley.
For many years, those who have been studying how Silicon Valley came about in the San Francisco Bay Area would point to a wide range of success factors: the role of universities, early pioneering entrepreneurs and venture capital investors in the region, and propitious timing, from the transformation from the defense industry in the 1930s to the emergence of the semiconductor industry in the 1950s, followed by the computer industry and then the internet. Even the weather and the culture in the area are identified as favorable factors that became magnets for talents from across the country and the world.
In other words, Silicon Valley did not happen because of a top-down government policy design, but because of natural and even coincidental convergences of people, capital, research, and, yes, public policy.
So, it may not come as a big surprise that none of the other wannabes from all over the world have been able to truly rival Silicon Valley, although some countries or regions may have gained significant leadership and success in certain areas, such as semiconductors for Taiwan.
For China in particular, the second largest technology producer and market in the world, its main tech centers of Beijing, Shenzhen, and Shanghai, and other hubs such as Hangzhou and Chengdu, are very much the creation of government policies, directives and financial support. This of course can be expected as the norm in a country like China, with the planned economy nature of its government. While these Chinese tech hubs have been able to take advantage of China’s enormous domestic market in the last few decades, they simply cannot come close to the international reach and global influence of Silicon Valley. Their fates continue to be highly susceptible to manipulation from government policies, such as the Chinese government’s crackdown on the tech sector in the last two years, directly leading to the severe downturn for the entire tech sector in China.
In recent years, with soaring costs in California, other tech hubs have indeed gained grounds in the United States, such as the Austin, Texas, and Seattle, Washington, areas. But so far, no other location has been able to match Silicon Valley’s eminence in terms of scale, depth, breadth, or scope – whether in the U.S. or abroad.
Despite that history, last week, the Biden administration announced a $500 million tech hub funding scheme (formally known as the Regional Technology and Innovation Hub Program). As part of the $10 billion CHIPS and Science Act, the program sets a goal of identifying about 20 U.S. cities or regions as prospective tech hubs, and eventually selecting 10 for funding. The obvious question is: Can the U.S. succeed where so many have largely failed? Indeed, the broader question that has been asked and debated by many since the passage of the CHIPS and Science Act is how to make sure that a return to government industrial policy provides the right answers to the global challenges faced by the U.S. in terms of geopolitics and competition, particularly with China.
To support the new tech hubs, the Biden administration’s scheme aims to bring together “industry, higher education institutions, state and local governments, economic development organizations, and labor and workforce partners to supercharge ecosystems of innovation for technologies that are essential to our economic and national security.” Each applicant region must focus on one of the 10 key tech areas identified in the tech hub statute: artificial intelligence, high performance computing and semiconductors, quantum technology, robotics, natural and anthropogenic disaster handling, advanced communications, biotechnology, data management and cybersecurity, energy technology, and advanced materials science.
The $500 million authorization of this fund is actually relatively small, even though the administration has committed to seeking further appropriation from Congress in the next two years. But the modest financial incentive may be a blessing in disguise. While sustained and long-term policy consistency is crucial, on the other hand, no local or state governments, private companies or even universities should be lured to the scheme just because they see a big check being handed out. Every participant – private or public – in the partnership must be committed to invest with its own resources.
Compared with other countries, the United States enjoys one particularly important advantage – having many outstanding teaching and research universities across the nation that can serve as anchors for tech hubs in conducting research, training talents, and acting as the bases for technology transfer and incubating new startups. Already, several recent examples showcase the viability and vibrancy of even the existing regional private-public-academic collaboration. In Arizona, TSMC’s new facility has a partnership with Arizona State University. In Ohio, Intel’s “Silicon Heartland” project includes a role played by The Ohio State University. In Indiana, U.S. foundry SkyWater Technology moved to an industrial park affiliated with Purdue University.
In addition, community colleges are increasingly enlisted in an effort to train an even broader base of skilled workers, with the support from tech enterprises, to supply them with skilled manpower to fill the new jobs created, which of course will be also welcomed by state and local governments.
So, whether the United States can duplicate Silicon Valley in one or more new locations may be the wrong question to ask. There are some success stories that market and natural forces can create through sheer luck, and others fostered by dedicated, targeted nationwide efforts, with the right mix of ingredients of policy, innovation, investment, and resources. Each tech hub will not need to do everything, but must do enough to maintain and extend U.S. global tech competitiveness in its focus area, meanwhile fostering more regional economic equity.
As U.S. Commerce Secretary Gina Raimondo said, “You shouldn’t have to move to Silicon Valley if you’re a scientist with a great idea.”