Silicon Valley Is Vulnerable

When I was nineteen, London was only just adopting air-conditioning. Summers had been getting hotter for a while, and rain less frequent, yet many offices were still sweat-boxes. Men regularly petitioned for the right to wear shorts, or at least (half jokingly) skirts. These days we can work from home in our underwear. Progress!

Twenty-odd years ago, I remember being envious of guys who worked in a data centre. It was cool in there, and I dislike heat, so a trainee engineer job would have been perfect. If only I had something to offer. Alas, I was a no-nothing teenager, hired during the great boom when any candidate was worth gambling on. Until then, I'd thought of "technology" as something ethereal - cyberspace - I didn't even have a personal email account, so seeing a data centre was a revelation.

Servers and wires arranged in orderly rows of glass boxes. Metal drawing electricity from cables and pumping it back into the ground as messages for the next data centre, and so on across the city, the country, the world. I hadn't a clue how any of it worked on a technical level, let alone the mathematics that I now take for granted, but it made intuitive sense - technology was just physical infrastructure, like bridges or railways. I think I've been guided by that intuition over my career.

I mention this because I've been appalled and vaguely amused by comments from Silicon Valley's more hawkish voices - the so-called Nerd Reich of billionaire founders, CEOs and investors. It's been an open secret for a long time that these guys have pretensions to go along with delusions of grandeur - and their sudden shift to Trump's agenda is much less sudden when you consider the hair transplants, wardrobe upgrades, muscle building and martial arts training they've done over the years to contort themselves into alpha male stereotypes. Now, they're saying the quiet part out loud.

The general gist is that since Silicon Valley built the modern world and owns most of it, the giants of its industry ought to rule the world, too. One particularly notable billionaire has even written what amounts to a manifesto. It's all somewhere between a juvenile reading of Ayn Rand and a kind of manifest destiny for incels. It’s also axiomatically incorrect. Putting a pin in the twin facts that much of the information age was built outside of America, and that much of America's prodigious contributions came from its universities and the venerable Bell Labs on the East coast, Silicon Valley is more dependent upon the rest of the world than people think.

Yes, the biggest tech companies by market cap are Valley companies. And yes, a lot of tech infrastructure is in data centres owned by them. And just in case I don't sound silly enough yet, let's also note that the ostensible behemoth of computer chips is Nvidia, the Valley darling of stock brokers.

But a bit more colour emerges if you keep looking upstream. You probably already know, for instance, that Taiwan is the epicentre of computer chip manufacturing (Nvidia - and almost everybody - outsources there), but you might not know that the photolithography machines Taiwan uses to make chips come predominantly from The Netherlands. So, just two steps upstream from Silicon Valley take us across the Pacific and then across the Eurasian landmass. One more step takes us truly global.

All the physical infrastructure that makes up "tech" - the chips, wires, touchscreens, plastic cases, photolithography machines, camera lenses, everything - has to be made out of stuff. Metals and rare earth minerals have to be mined and refined, oil has to be brought from the bowels of the earth and turned into petroleum products, and it all has to come from somewhere.

China is, by far, the biggest source and producer of rare earth minerals (and 70-90%, depending on who you ask); Central Africa is the major source of tantalum; the largest mining companies are Swiss, Chinese, Australian and British; and let's consider that all the stuff moves around the world by sea. The largest merchant fleets are Greek, Chinese and Japanese (and the only countries currently building significant numbers of ships are China, Japan and South Korea). Tech, at its root, is a global effort.

So, how did Silicon Valley gain and maintain its position as the centre of modern technology? Frankly, it got a lot of things right. All of the global supply and demand around technology needs a low-regulation home with ready supplies of skilled workers and capital. Through the second half of the 20th century, California's politics, laws, universities and wealth provided this and allowed a perfect storm of innovative thinking and ambitious commercialisation. Success bred success, allowing founders to roll the fruits of their labours into even bigger ventures, and networks of skill, experience and capital formed over decades that are very rare and very hard to replicate. That's priceless.

So priceless that international tech companies will inevitably plug into the Silicon Valley ecosystem and draw from it - services, skills, capital, partnerships, etc. This is no different to how the world's financial companies plug into London and New York, and fashion brands plug into Paris. Hubs of industry are chain reactions, or self-fulfilling prophecies. In any case, they're so important that people have to engage with them, and they stay important because people engage with them.

But what happens to Silicon Valley if geopolitics shifts? What if China decides to play tough and restrict the supply of rare earth minerals? Or Russian military units permeate the Congo and take control of its mines? Or the EU finally settles on - and funds - its own tech centre?

I don't know. But with so many geopolitical wrecking balls being fired from the White House in every direction, we may soon find out.

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