Hi-tech valley hits low point

PUBLISHED : Thursday, 02 December, 1993, 12:00am
UPDATED : Thursday, 02 December, 1993, 12:00am

TO people around the world, the name Silicon Valley conjures up an image of American innovation at its best.

No other spot on earth is as famous for the development of high technology as this California valley - whose real name is Santa Clara - which is roughly 30 kilometres in length and lies about 50 kilometres south of San Francisco.

Ever since the late 1930s, when high-technology companies began to spring up around the Stanford University research centre, the valley has been an important centre.

''Silicon Valley has been an accelerator in the development of the computer industry,'' said Mr Victor Ang, managing director, computer systems, for Hewlett-Packard in the Asia-Pacific region.

''There is so much talent in one place. The valley has helped broaden the base of people who can compete in the industry and been the greenhouse for a lot of innovative companies.

''It was the base for the whole of the workstations industry and a lot of software and networking companies started there.'' California is a world leader in the field of high technology with the state accounting for more than 20 per cent of the nation's jobs in computers, electronic components and scientific instruments and more than 29 per cent of all aerospace jobs in the United States.

One of the biggest computer companies in the United States, Hewlett-Packard, was started in 1939 by Stanford graduates Dave Packard and Bill Hewlett.

Appropriately enough for a California company, its first successful product was an audio oscillator used by Walt Disney to improve movie soundtracks.

Hewlett-Packard still has its head office in Silicon Valley where it is now surrounded by thousands of other companies.

A lot of the region's success has been due to its location near research institutions, like Stanford, San Jose State University and Santa Clara University, and its proximity to aerospace and defence firms.

''Stanford has been, to a large extent, the brain-engine of Silicon Valley,'' said Mr Ang.

''Start-ups like Hewlett-Packard have relied on the talent from Stanford. The university has provided a lot of employees and carried out a lot of R&D work for companies.'' Although the industry has been badly hit by the recession, which has seen the curtailing of R&D budgets, expansion and equipment purchases, analysts say the outlook for the electronic instruments industry is favourable because the instruments can communicate data to each other.

This ability is expected to increase demand and allow producers to expand overseas markets.

Increasing overseas sales are expected to result in a growth rate of 10 per cent between 1991 and 2001 for the electronic components industry.

In 1991, California's strongest markets for components were Japan, which had a 12 per cent growth rate, and Southeast Asia, where the growth rate was 14 per cent.

''The computer industry is going through a rough spot due to world recession,'' said Mr Ang.

''The shake-out will mean that the next few years will see fewer companies dominating the hardware industry.

''If you look at where society is going over the next 20 to 50 years, Silicon Valley will play an important role in the development of the multimedia age where computers, telephony and television will merge and coalesce.''