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Silicon Valley Rebounds, Led by Green Technology
By LAURIE J. FLYNN
New York Times
SAN FRANCISCO, Jan. 28 ? After five years of job losses, Silicon Valley is hiring again. The turnaround coincides with a huge increase of investment in the emerging category of clean environment technology.
?We?re looking at a tremendous market opportunity,? said David Pearce, founder and chief executive of Mirasole, a manufacturer of solar cell technology in Santa Clara, Calif. ?Supply is the only constraint.?
Mr. Pearce founded the company in 2001, but it was not until the middle of 2006 that Mirasole embarked on an ambitious plan to grow from 25 people a year ago, to at least 300 employees by the end of 2007. Today, Mirasole has 95 employees, most of them engineers and scientists.
Mr. Pearce?s company may serve as a harbinger in this region. For Mirasole, which in October closed a $35 million round of venture financing, the time is finally right for quantity sales of the solar cell product it has spent the last few years designing.
In Silicon Valley, investment in clean technology ? from alternative energy products, like solar panels and hybrid cars, to the use of nanotechnology to solve environmental problems ? went from $34 million in the first quarter of 2006 to $290 million in the third quarter, according to an annual report released Sunday by Joint Venture: Silicon Valley Network, a research organization in San Jose, Calif.
?It?s the hottest area of investment right now,? said Tom Werner, chief executive of SunPower, a solar technology company.
Russell Hancock, chief executive of Joint Venture, said the emerging need for clean technology is a good fit with the skills and companies already in the area. ?A new cluster is emerging in Silicon Valley that provides leadership around global climate change,? Mr. Hancock said.
Clean technology crosses many industries, with nearly a quarter of the venture capital in clean technology going to software companies, followed by 15 percent going to semiconductor companies. While it is unclear precisely how many jobs were added in the field, the increase is substantial.
But Silicon Valley?s job gains are not limited to clean technology. Overall nonfarm employment in Silicon Valley, a region sprawling across 1,500 square miles over four counties, grew by more than 33,000 from the second quarter of 2005 through the second quarter of 2006, an increase of nearly 3 percent. Overall venture capital investment in Silicon Valley was $5.2 billion in the first nine months of 2006, compared with $4.6 billion in the same period in 2005.
While the job growth is still far from what the area enjoyed during the boom years of the late 1990s, it is a major reversal. After the dot-com bubble burst six years ago, thousands of engineers and technology workers were unemployed, with suddenly little demand for their skills. In 2002 alone, Silicon Valley lost more than 10 percent of its jobs. During the downturn, it had a net loss of 220,000 jobs.
Stephen Levy, an economist with the Center for the Continuing Study of the California Economy, said the growing demand for clean technologies might well make this emerging boom cycle a lasting trend. Developments on the legislative front may help stimulate that growth. In September, California lawmakers set a goal of cutting the state?s greenhouse emissions 25 percent by 2020.
?Every time there?s a new technology, Silicon Valley does pretty well,? he said. ?That?s beginning to happen again.?
The region first started to show a reversal in late 2005, Mr. Levy said, a trend he attributed to an increase in worldwide demand for technology products. ?Silicon Valley sells more to international markets than any other region, so we can grow as the international market grows, even if the U.S. market isn?t growing,? he said.
These days, signs of a recovery in Silicon Valley are widespread. Office vacancy rates are declining, while road traffic, an unofficial barometer of employment in California, is noticeably increasing.
Median household income in Santa Clara County, the largest county of Silicon Valley, was up in 2005 for the first time since the downturn. It reached $76,300 in 2005, the most recent year for which figures are available, compared with $72,000 in 2004, the lowest point since the downturn.
Mr. Hancock points out that Silicon Valley has been characterized by boom-and-bust cycles for decades. Industries based on military contracting, personal computing and electronic commerce have thrived and then were followed by a period of contraction. Now, almost everyone agrees that Silicon Valley is coming back again.
?These waves are nothing new,? Mr. Hancock said. ?But the last one was full of hype and excess, and we had to go through a powerful period of readjustment. This time the investing feels more sober and well thought out.?