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The death of Andy Grove and Silicon Valley

Patrick Thibodeau | March 23, 2016
The former Intel CEO, who died Monday, had this warning to America.

"You could say, as many do, that shipping jobs overseas is no big deal because the high-value work — and much of the profits — remain in the U.S.," Grove wrote in the Bloomberg piece. "That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed?"

Grove saw the job machine breaking down throughout the economy. He was writing during the Great Recession. While employment has picked up since then, in some of the occupations that matter to manufacturing, the forecast is troubling.

The U.S. Bureau of Labor Statistics, in a recent update of its occupational outlook, put the 10-year job outlook for electronic and electrical engineers at "0% -- little or no change." The IEEE-USA, the largest professional engineering association in the U.S., said the BLS estimates "are probably correct."

Grove acknowledged that Intel was formed at a time when scaling a company was easier to accomplish. China wasn't a factor in 1968.

But with the loss of manufacturing, the U.S. is breaking the chain of experience, Grove wrote. He argued for a new systems of incentives and "an extra tax on the product of offshored labor."

"Without scaling, we don't just lose jobs - we lose our hold on new technologies," he wrote.

As of the end of 2014, Intel had 106,700 employees worldwide, with approximately 51% of those employees based in the U.S.

China, meanwhile, has a formal plan for gaining dominance of the semiconductor industry. Its National Integrated Circuits Industry Development Plan seeks to lead the world "in all areas of the integrated circuit supply chain by 2030," U.S. trade officials recently noted.

Grove could be wrong about the risks. The work in robotics, self-driving cars and artificial intelligence could lead to all kinds of new companies and industries.

Instead of going to seed, Silicon Valley may be shifting from an economy once built on computers, to something more powerful. Perhaps a new generation of people with the capabilities of Andy Grove will figure it out. But until then, his warning and legacy remains.

 

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