Silicon Valley Story: Applied Materials Executive Relocating to China

BY Dave Gustafson  April 5, 2010 at 5:17 PM EDT

SAN FRANCISCO | Silicon Valley is looking deeply inward and finding things are not as they were. The valley, where firms like Google, Apple, Intel and Applied Materials have their headquarters, is losing steam and perhaps the innovative spirit that made it the economic engine that propelled California and the U.S. into the front ranks of high tech.

A drop in employment — 90,000 workers in the last year — is just one indication of the problems facing the valley. A new survey by Joint Venture Silicon Valley Network is depressing reading, especially coming from a group that has been very high on the valley for the past decade or more.

In our story for the PBS NewsHour, we found that while prices for homes remain high and it’s expensive to live in the valley, the dynamics are changing. Fewer highly trained foreign workers are coming and staying, which has hurt the companies that rely on their technical skills and talents.

A ride down the highway reveals a huge number of vacancies in buildings that once housed thousands of startups hoping to invent the next big thing. Much of the action has moved overseas, to India and China and Israel, which are developing their own high-tech industries and employing their own people, who are getting better technical educations than their counterparts in the U.S.

One company that is bucking the trend, because it sees the handwriting on the wall, is Applied Materials, for decades one of the valley’s biggest employers. Applied makes the machines that make chips, or semiconductors — the brains of computers.

But in the past few years it has added a new part to its business. It now is manufacturing machines that produce thin solar panels. But most of the work is going on outside the U.S. And in fact the corporate technology officer for Applied Materials, Mark Pinto, is moving his family to China, so he can oversee the factories and the research facilities that Applied has built there. Pinto was the subject of a recent profile in the New York Times, and he is a major character in our NewsHour story about the decline of the Silicon Valley. He sees firsthand how difficult it is for American companies to find home-grown engineers, especially solar experts, since there are hardly any being trained at our universities.

But he doesn’t think the valley is in as much trouble as the study by Joint Venture suggests, as long as companies can change with the times, and California can get its act together and better educate its children.

Watch extended excerpts from our interview with Mark Pinto; we spoke near a big solar array on the Applied Materials grounds in Santa Clara, Calif.