The Truth of the Silicon Exodus
- Charles Z.
- Aug 16, 2021
- 2 min read
The “Silicon Exodus” has been described as a phenomenon whereby companies already present in the Valley are starting to leave, and new companies and entrepreneurs find it hard to invest when the low success rate is apparent. However, is this exodus truly on track to dethroning Silicon Valley as the world’s biggest hotspot for tech companies, or is it just over exaggerated rumours about tech companies collapsing?
Around December 2020, around the early portion of the Exodus, many high profile executives and investors such as Elon Musk announced that they would be moving out of Silicon valley. Other companies, such as Hewlett Packard Enterprise Corp. also started relocating their offices and headquarters out of the valley as well. These series of relocations were alarming for some, and these series of events made the Silicon Exodus appear to be a serious movement for most tech companies to move out of Silicon Valley.
Though tech companies largely took the blame for the Exodus, many other factors such as the high cost of land, limitations on commercial construction, the limited parking, etc. caused many companies to be limited in what space they could buy, and how they could customize it to suit their needs. California also has the highest corporate income at a rate of 8.84%, making the premise of having a company’s headquarters in Silicon Valley less desirable. Young entrepreneurs and investors are also finding it difficult to create new startups, as these factors continue to be a massive inconvenience that compounds in severity for less developed and established companies.
However, this Exodus isn’t as severe as some people would like to think. Many tech companies such as Apple, Google and Facebook have increased their market caps and expanded further into Silicon Valley. These companies have been doing well even through the COVID-19 pandemic, and have yet to relocate from Silicon Valley (at least publicly). Growth is still present here, and companies are still thriving and turning profits in the Valley.
Unfortunately, those factors mentioned above still contribute to the slow down of new start ups and the decision for existing companies to leave altogether. The Exodus may not be severe in the present, but over time even the giant tech companies may reconsider whether or not to move their offices and headquarters to another state. Overall, the factors contributing to the Silicon Exodus harm smaller businesses and startups more than bigger, more established corporations. It is entirely possible that Silicon Valley may be dethroned as the King of Tech in the future, though there will still be large corporations sticking around regardless.
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