Thousands of Silicon Valley employees have been laid off over the past year, often finding out the bad news by email. Hit hard by rampant inflation and over-hiring during the Covid pandemic, the US tech giants of the San Francisco Bay Area have faced one of the worst crises in their history. A few months ago, a banking crisis added to their woes, when Silicon Valley Bank went bankrupt, before being rescued by the federal government at the last minute. Nevertheless, the tech sector – renowned for its resilience – is refusing to give in to defeatism, as our team reports.
Silicon Valley is synonymous around the world with innovation and new technology. In just a few decades, the area surrounding the San Francisco Bay in Northern California has become home to a unique ecosystem of start-ups and tech giants valued at billions of dollars. It all started at Stanford University, where young engineers, Bill Hewlett and Dave Packard, were encouraged by their professors to innovate and launch their own companies. HP would be the first of many: Apple, Google, Cisco, Intel and Meta were all founded in Silicon Valley.
But in the autumn of 2022, the tide turned and storm clouds gathered over the tech eldorado. One redundancy followed another: 12,000 layoffs at Google's parent company Alphabet, 11,000 at Meta (which owns Facebook and Instagram), 10,000 at Microsoft, 18,000 at Amazon, 8,000 at Salesforce, 4,000 at Cisco and 3,700 at Twitter. The figures were so staggering that some experts predicted the beginning of the end for Silicon Valley.
A few months later, panic spread to the world of finance. Silicon Valley Bank – the bank of reference for startups – went bankrupt, only to be rescued at the last minute by the federal government, which put $25 billion on the table to prevent contagion to the rest of the banking sector. Disaster was narrowly averted, but doubts persisted. What could make the sector bounce back now?
The answer came in November 2022 and can be summed up in two letters: AI. Artificial intelligence, which the sector had already been talking about for a long time, became a serious driver of innovation in just a few weeks with the launch of ChatGPT. It's now permeating all sectors linked to new technology. In the aisles of the TechCrunch Disrupt trade show in San Francisco, investors and entrepreneurs talk of nothing else. And those who have been made redundant in recent months are already reinventing their futures.
But there are also those in Silicon Valley who have been left behind. With the explosion in property prices, the middle classes – teachers, restaurant workers, cashiers, etc – can no longer afford housing in the Bay Area, despite high salaries. This housing crisis is driving Silicon Valley to expand ever further, with increasingly crazy projects such as California Forever, a new town created from scratch that could one day be home to 50,000 people. More than ever, the tech valley continues to look to the future.
