Is Silicon Valley Gridlock a Good Sign for Semiconductors?

Let’s face it, the semiconductor world has always revolved around Silicon Valley and it always will. After commuting to Silicon Valley from the East Bay (45 miles each way) for the past 30+ years I’m acutely aware of the traffic patterns and how they relate to the economy. With the advent of smartphones I can work or be entertained just about anywhere (waiting in line at Starbucks for example) except of course while driving which is one of the many reasons why I absolutely hate traffic!

Traffic really started getting bad in Silicon Valley during the late 1990s due to the dot-com bubble. Back then semiconductors were all about computers and computers were powering the internet explosion. After the bubble burst there was a brief traffic hiatus but the housing boom again brought gridlock to Northern California. In 2008 the housing bubble burst leaving Silicon Valley with the highest unemployment rate I have ever experienced. Traffic was also the lightest I have experienced which was a welcome change. I no longer had to leave home before the crack of dawn and return home well after dinner. Nor did I have to suffer road raging imbeciles. I drive a little tiny car so modern day SUVs look like weapons of mass destruction. My monster truck driving brother calls my car a speed bump!

An interesting side note, I have seen some very aggressive drivers heading to Starbucks but when they are in line waiting for their caffeine fix they are polite as can be! Go figure…

If you drive down the main arteries of Silicon Valley you will see thousands of new or soon to be built apartments and monstrous office buildings on the rise. As Apple finishes its 2.8-million-square-foot Space Ship Campus in Cupertino that will house more than 12,000 employees they are also leasing hundreds of thousands of square feet in Santa Clara and San Jose. FaceBook and Google are also expanding their Silicon Valley footprint and hundreds of baby unicorns are taking up residence. The unicorns I’m referring to are the companies that have billion dollar valuations based on fundraising rather than revenue. From what I read there are now more than 100 full grown unicorns so yes there is another bubble coming, absolutely.

Fortunately or unfortunately most of the bubble headcount in Silicon Valley seems to be software related versus semiconductor professionals. Are our jobs safe in the next bubble? I would say yes, much more so than the last two bubbles. During the dot-com bubble there were tens of millions of people intermittently connected to the internet. Today there are more than three billion people “always-on” the internet out of a total population of more than seven billion (less than half). In fact, last week Mark Zuckerberg announced that a record one billion people logged onto Facebook in one day. Yet out of the more than seven billion people on this planet only two billion have smartphones (less than one third) so we have plenty of semiconductor growth yet to come. Sound reasonable?