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Silicon Valley job losses slow; Biotech software gains

The wounds inflicted on the regional heart of high tech by the economic downturn appear to be healing -- at least the area is bleeding jobs at a slower rate. That's the conclusion of a new report from Joint Venture: Silicon Valley Network, a non-profit organization that provides analysis on issues affecting the economy and quality of life in the area.

According to "The 2004 Index of Silicon Valley," scheduled for release today, the region lost about 5% of its jobs during the year that ended in June 2003, which was a slower pace than the 10% loss rate for the period ending in June 2002.

In five industry categories, Silicon Valley lost a smaller percentage of its jobs than the nation as a whole during 2001 and 2002, including semiconductors, hardware manufacturing, electronic component manufacturing, biomedical companies and so-called innovation services (which includes high-end technical workers such as computer scientists, mechanical engineers and biophysicists).

However, the software sector, which employs more people in the area than any other technology industry (nearly 100,000 people in 2002) did not fare as well. According to the report, software lost a higher percentage of jobs locally than in the rest of the nation.

The report also noted that the bio-med sector lost the fewest jobs of this group; and for the first time, venture capital investment in biotechnology in Silicon Valley matched investment in software companies.

The results of this report may indicate that the heart of high tech is getting a by-pass in the form of economic restructuring. Biotechnology and medical device manufacturing appear to be poised to increase their presence in Silicon Valley as the software industry's concentration declines.

"After three painful years, we are now seeing the early signs of yet another Silicon Valley re-invention," said Russell Hancock, president and CEO at Joint Venture. "Although it is slower than we would like it to be, we are seeing clear evidence that the Valley's future is taking shape."

If it happens, this won't be the Valley's first industry shift. During the 1970s, the local economy moved away from defense and toward integrated circuits (ICs). The 1980s saw another shift away from ICs and toward PCs. During the 1990s, the shift was toward software. According to figures from Joint Venture, the last decade of the 20th century saw local employment in software industries increase dramatically. By the association's reckoning, the percentage of employees working in software industries in the Silicon Valley tripled from 7% in 1992 to 21% in 2001.

Joint Venture created the annual Index of Silicon Valley to provide a reliable source of information on the economy and quality of life in Silicon Valley -- which the group defines as Santa Clara County plus the adjacent counties of San Mateo, Alameda and Santa Cruz. The Index is designed to provide a "sound basis for proactive, coordinated efforts to make Silicon Valley a better place to live, work and do business."

More information is available at the Joint Venture Web site found at http://www.jointventure.org.

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at john@watersworks.com.

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