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The End of Silicon Valley

A moment of silence, please, for Silicon Valley. Intel announced last week it would close its chip-manufacturing plant located near the company’s headquarters in Santa Clara – and with it, the very last chip fab anywhere in Silicon Valley.

The technology that gave its name to the Santa Clara valley, once called “the valley of heart’s delight” for no immediately obvious reason, has left for greener pastures. When I started working in electronics, Santa Clara still had fruit orchards in it. Chip plants alternated with cherry trees. Now there’s no silicon in Silicon Valley. (There’s still plenty of silicone jiggling around the valley, but that’s a different story entirely.)

The rise of Silicon Valley has been chronicled elsewhere, but the short version involves the happy confluence of universities, talent, and cheap land. Two of those three still exist in abundance in Santa Clara county (you guess which ones). A quick perusal of online real estate listings shows that modest houses anywhere near Intel Galactic Headquarters start at about $1 million for an aging fixer-upper.

But it’s not housing costs that drove the fabs away. It’s what’s under the soil, as in tectonic plates. As semiconductor technology became more advanced the fabs and foundries became exquisitely sensitive to dust, contamination, and vibration. The merest disruption could ruin a week’s worth of chip production, consigning several millions of dollars of silicon to the dumpster. That’s exactly the kind of plant you don’t want to build over an earthquake fault.

The awesome cost of a fab – and their occasionally awesome profitability – also meant chipmakers like Intel went looking for more favorable tax environments. Oregon, Arizona, New Mexico and states or even countries further afield offered lucrative incentives for locating fabs within their borders. Anywhere that land was cheap, flat, and geologically stable the local government could provide the rest: roads, clean water, an educated workforce, and deferred taxes. Silicon Valley was where chips were designed; Singapore, Ireland, and Idaho were where they were fabricated.

Perhaps coincidentally, Intel’s chairman of the board, Craig Barrett, announced his retirement the same week as the plant closing. The man who, along with Andy Grove and Gordon Moore, helped define Intel and drove its success may have felt the passing of this milestone more keenly than most. Throughout his tenure, Intel had always manufactured chips within sight of his corner office. If the fab goes, I go, he may have thought. It’s getting too late in the day for both of us.

And so this week we mark the retirement of two Silicon Valley landmarks that gave the area its flavor and its very name. Let’s all remember to explain to future generations how that name came about.

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