Monday, Jul 05, 2021, 16:52 Economy

Gurman: Silicon Valley Is Turning Into A Problem For Apple – Company Wants To Decentralize

Starting in the 50s, the bushes, almond trees, and orchards of Silicon Valley have seen themselves slowly replaced by a sprawling technopolis. It started with the "Stanford Industrial Park" and by only three decades later, an entire tech-conglomerate had settled on the surface of the Santa Clara valley. Some of the most recognizable company names with current seats in Silicon Valley are Apple, Intel, Google, Nvidia, Hewlett-Packard, Oracle, Cisco, Facebook, and also the car manufacturer Tesla. However, the situation has begun to change slowly – as with all things in life, and it is beginning to seem as if the massive tech-park is nearing the end of its days. Although the companies in Silicon Valley are still doing well, the region is beginning to be associated with more and more disadvantages.

The Silicon Valley Exodus Has Begun
Just a few months ago, one of the founding members of Silicon Valley – Hewlett Packard, announced its decision to leave Silicon Valley. At the moment, there are still very few locations in the world with such a concentration of the same level of talent – however, high rent prices and other costs are starting to become more and more disadvantageous to companies in the region. Coupled with the home-office revolution and a more and more connected world, having a centralized base for all operations is becoming less necessary for tech companies. On the other hand, it's also become more difficult to find the appropriate talent, as Mark Gurman recently reported reported concerning Apple. Partially as a result, Apple has long since abandoned the "everyone who wants to work at Apple has to move to Cupertino" policy in favour of worldwide research centers.

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Silicon Valley circa 1900


Apple Doesn't Want To Leave Cupertino
Despite some of the company's peers either leaving or executing plans to leave Silicon Valley, Apple doesn't currently plan on taking suit. However, a problem has begun to arise, whereas Silicon Valley's former advantage was its abundance of concentrated talent – this has begun to change. Not only has the search for employees become more difficult in recent years, but there has also even been somewhat of an emigration movement. Countless engineers have recently left Apple, as even highly paid professionals at Apple are met with difficulties affording the expensive San Francisco lifestyle. Another factor also speaks against Silicon Valley as a center for the company: it's difficult to meet diversity quotas or accomplish the goal of establishing a diverse staff with only the largely homogenous tech-population of San Francisco to pool from.

...but Apple Does Want To Decentralize
In response to these changing factors, Apple has begun to gravitate towards an accelerated decentralization process. In order to compete for some of the same employees as Amazon and Google, Apple is also expanding and building offices and development centers in other regions – where the company is not only closer to potential employees but also able to operate at a reduced cost. At the moment, for example, Apple is investing in new hubs in regions such as Los Angeles, San Diego, and states such as Oregon, Washington, Colorado, Idaho, Massachusetts, and Texas – home to Apple's second largest campus as well as Houston, also known as a tech-haven.

Apple's chip center in Munich, Germany.


Although there are now many new Apple hubs in The United States, the expansion started much earlier. Shortly after taking office, Tim Cook quickly recognized that Apple had need of branches and development centers in many other countries – both things which Microsoft had already established quite well. One such center can be found in Munich, Germany, where Apple recently announced a 1 billion € into the "European Center for Chip Design".

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