Carving the Valley

Christophe Lécuyer, Making Silicon Valley: Innovation and the Growth of High Tech, 1930–1970. Cambridge, MA: MIT Press, 2005. x + 393 pp. $40.

Reviewed by Alex Pang

In late 2006 the search-engine giant Google paid over $1.6 billion to acquire YouTube, an 18-month-old start-up. The video-sharing service had just over 60 employees and made nothing of its own other than a little software code; the value of the company rested in the vast audience that uploaded and shared videos. For many the sale seemed to mark the return of the dot-com boom and a coming of age for “Web 2.0.”

These days companies seem to conjure values out of thin air, unlike in the early years of Silicon Valley when firms actually made things. The growth of the high-tech industrial cluster on the San Francisco Peninsula is the subject of a new book by Christophe Lécuyer, a senior research fellow at CHF and a principal economic analyst for the University of California system. Making Silicon Valley focuses on the radio tube–making companies that were on the leading edge of industry in Silicon Valley from 1930 to 1970: Eitel-McCullouch, Varian Associates, Litton Industries, Fairchild Semiconductor, and National Semiconductor. The market for vacuum tubes has since shrunk to a few audiophiles, and a shakeup in the microwave industry in the 1960s forced several formerly well-known companies to consolidate, but some of these companies (e.g., National Semiconductor and Varian) still exist nevertheless.

Lécuyer argues that manufacturing was central to the rise of Silicon Valley—and by implication an important source of regional and global competitive advantage. Manufacturing has been something of a blind spot for valley boosters and historians of technology alike. Too many stories start with innovation in the lab and then jump straight to products on the shelf. Things happen in between, but they are not seen as very interesting. Manufacturing is not just a process of translating prototypes into products, however. New clients place demands on products that require changes to the way they are made; patent restrictions force companies to develop new manufacturing methods; and sometimes prototypes just are not ready for the market. Figuring out how to produce thousands or millions of units of complicated, high-performance components requires as much ingenuity and creativity as inventing a device in the first place. Solving those problems generates new innovations. Several technological breakthroughs in Silicon Valley’s early days occurred because consumer demands set engineers on a path that yielded revolutionary results. (Most notably, Jean Hoerni invented the planar process for manufacturing semiconductors in response to military demands for ultra-high-performance components.) This is not a purely historical phenomenon. In the 1980s product designers working with Apple essentially reinvented the mouse that Steve Jobs had seen at the Xerox Palo Alto Research Center (PARC) and wanted to use on new Lisa and Macintosh computers. The PARC mouse was elegant but expensive and failure prone; the Apple mouse, in contrast, combined high-precision performance with low-cost components, and it was inexpensive, rugged, and easy to manufacture—a milestone in the history of computing and the history of electronics manufacturing.

A recurring argument in Making Silicon Valley is that the region’s vibrancy is the product of the remixing of technical and national cultures. For example, in the 1920s and 1930s the radio industry, professional radio engineers, and amateur radio enthusiasts all contributed to the growth of a vacuum-tube industry on the peninsula. San Francisco’s huge maritime industry and large U.S. Navy presence created a demand for radio equipment and well-trained radio engineers. But the major radio-tube producers, Eitel-McCullouch and Litton Industries, were also influenced by the local ham radio community, whose social, egalitarian, and competitive but open character still resonates today. This vision of Silicon Valley as a cultural melting pot has been explored by a number of other recent writers. In What the Dormouse Said (Viking: New York, 2005) John Markoff argues that both the design of and demand for the personal computer was shaped by the Bay Area’s extraordinary counterculture; AnnaLee Saxenian has shown how networks of immigrant engineers and entrepreneurs (particularly from India and Taiwan) have built companies and fortunes; and Frederick Turner has delved into the intermingling of technical cultures and countercultures.

Lécuyer’s argument is that Stanford University’s influence in jump-starting and sustaining the valley has been overstated; this might be more controversial, but it is convincing. The late Frederick Terman, dean of Stanford’s engineering school, was an angel investor in Hewlett-Packard and encouraged promising young graduates to remain in the area, but when all is said and done, Stanford gets more from valley companies than companies get from Stanford. In contrast, in Lécuyer’s account the military emerges as a major player in the valley’s history through the 1960s, for better (military technical specifications pushed companies to innovate and government contracts could turn a small company into a big one) or worse (the money tended to dry up quickly).

The story of the formation of Silicon Valley is one of collaboration. Successful figures (e.g., Charles Litton and Russell Varian) were able to build teams, share knowledge, and train others in complex manufacturing techniques. In many earlier accounts of Fairchild Semiconductor, National Semiconductor, and Intel, Robert Noyce is presented as a central figure in the growth of Silicon Valley. In Lécuyer’s analysis—as in Leslie Berlin’s recent biography The Man Behind the Microchip—Noyce emerges as just the most memorable player in a strong cast.

Making Silicon Valley is methodologically bold, yet thorough in its documentation—a combination that makes for outstanding, long-lived histories. My one substantive complaint is that labor gets too little attention for a book about manufacturing. Valley entrepreneurs were (and still are) strongly anti–labor union, and some of their willingness to experiment with novel workplace designs and benefits reflected a desire to keep unions out by keeping workers happy. But they also valued the skills that their workers built over time, and some examination of Varian Associates and National Semiconductor from the workers’ point of view would have rounded out Making Silicon Valley perfectly. Still, Lécuyer has written a book that will appeal to historians of science and technology, regional development specialists, and management and manufacturing specialists.

The book may yield unforeseen lessons because manufacturing is not completely gone from Silicon Valley. Earlier this year Nanosolar, one of a slew of new Silicon Valley companies working on alternative energy, announced plans to build its new factory not in China or India, but in the valley. As one venture capitalist put it, the photovoltaic solar-cell company is “trying to move the photovoltaics industry from the economics of the semiconductor business to the economics of the printing business”—a move that requires manufacturing genius of the sort Lécuyer describes. One of Nanosolar’s early investors: Google.