Otellini and T.J. are both right. I'm a 3rd generation San Franciscan who moved from Los Gatos to Austin when it just got too expensive to live in the Bay Area. With no state taxes and little bureaucracy Texas has been pulling in tech companies for years, most of which are coming from Silicon Valley. If you can redistrict California to break the gridlock in Sacramento; stop voting yes on endless bond issues; and move to less expensive areas but be allowed to telecommute to jobs in back Silicon Valley; then I'm hopeful. And if not, not.
Two comments on this insanely myopic article, looking at the world from TJ's point of view.
1) Most of the fabs moved away from Silicon Valley a long time ago, driven by cheap capital/subsidies and land prices. Huge subsidized foundries in Asia, Dresden and Malta NY, fabricate a huge percentage of the non-Intel chips. And for lower volumes, chipmaking has been replace by use of FPGAs. Is that a slow bleed - No, it's a major change in market structure.
2) Taxes and regulation are a puny factor in the costs of Silicon Valley. Housing and office space costs are phenomenal because of limited geography, a concentration of financial success, and an unwillingness of local communities to densify (no regulation, but local politics in action). The success of Google, Facebook, Linkedin, Apple, and others are simply crowding out lesser performing entities like TJs companies. Try finding office space in Mt. View. Try finding a home under 1M$ within 5 miles of Google.
Good article. Once you have the fabs, you have them. What drove them away was increased regulation by the state, and soaring energy costs. California going "green" ended up with a lot of greenbacks leaving. Similar thing happened to aerospace in Southern California. Guess we never learn. Just about any survey puts California at the bottom in terms of business friendliness. Add the logic-free zone called Sacramento, and there are no surprises here.
Seriously? You think fabs left Silicon Valley because of overzealous business licensing restrictions, rather than land is essentially free, wages are 1/20th, and government-backed loans are sub-real or even free (forgiven) in China? All of this compounded by a complete lack of a US industrial policy designed to retain manufacturing jobs?
I realize this was intended to be a puff piece, but it's actually worse than that: it's an embarrassment to engineering. Engineering is supposed to a be profession; it's supposed to be able to provide meaningful guidance to governmental policy. Your job as a technical journalist is to be the mouthpiece for this effort: hop to it.
This honest article is really a service, not an "embarrassment". The fiscal sustainability problems of CA are talked about frequently around our industry -- believe me he is correct about that. It has been good for EE's to have a healthy "center of gravity" rooted in Silicon Valley. The tree in Brian's closing paragraph is a prophetic "wake-up call" for fiscal responsibility. I live in Austin, where many hi-tech businesses are now re-balancing workforces here from CA. While Austin has it's own challenges, the bottom line is that economics always drives action and opportunity, and the trend is already clear. Please do not wait until the tree falls over.
TJ has bigger problem then CA biz environment, he has biz that is not cutting edge, but is trailing edge, which end up competing with companies in China that sell parts for commodity markets at 20% , where TJ has to deliver a 60% GM biz. So with this in consideration , he should relocate himself and his execs to Africa. So i do not buy his crying about CA biz as hostile, instead I challenge him to his Biz.
California's hostile business environment is hardly subject to debate; if you even open a storefront operation there you get taxed on every dime you make worldwide ('unitary tax'). Cypress makes high value-added parts that are yet to be knocked off by Chinese firms, but getting beaten up on price when selling into China is hardly just their problem. Finally, the problem with Silicon Valley is that it's gotten very expensive to live there. TJ's taking the only sensible course by having most of his employees live in satellite centers around the country and the world.
I don't find this the least bit surprising. Since WWII, California became the place where people flocked from other states, to go work for high tech industries. For reasons that have been discussed ad infinitum, e.g. the lower cost of manufacturing in Asia, California has more recently become the place where immigrants arrive to escape poverty and conflict from overseas. And the high tech jobs have been moving out.
This has a spiraling effect, where social services costs go up and up, and to compensate, the tax structure becomes ever more hostile to the deep pockets, i.e business.
So it's not surprising. Through the 1980s, California brought in high tech, high paying jobs, mostly from immigrants from other states. Then this trend changed. Immigration is now primarily lower income people with lower educational backgrounds, not chasing after those lucrative high tech jobs. You'll note in the above links that both unemployment and poverty increased markedly. Even before th housing bubble burst of 2008.
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