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Special Silicon Valley Issue | Future tech

Five Reasons to Hope

New Technologies That May Help Silicon Valley Rise Again

March 09, 2003|Charles Piller | Charles Piller is a Times staff writer based in San Francisco.

Times are grim, but Silicon Valley knows how to invent its way out of adversity. Three times the vultures have circled, three times the valley's technologists have chased them away.

In the 1970s, foreign manufacturers undercut Intel and other local titans with cheaper memory chips, ending years of easy profits and threatening to return Santa Clara County to farmland. Intel then shifted its focus to microprocessors, the more expensive brains of the computer. Microprocessors not only saved Intel, they also stimulated a cycle of innovation that brought personal computers to the masses.

When the PC era began in 1975, economist Doug Henton says, Silicon Valley had 830 technology companies; by 1990 it had 3,000. Five years later that boom was going bust as PCs became ubiquitous, boring and cheap.

But the valley roared back again when the Internet created a surge of innovations, from Web sites to e-commerce to high-speed telecommunications links for the home. And long before the collapse of the Internet economy, valley scientists were advancing theories and technologies that might again shape the future. Hopeful signs point to biotechnology for new drugs and medical treatments, and nanotechnology--structures at the molecular or atomic scale--or maybe a combination of the two. Nano-processors could create computers thousands of times more powerful than today's models. Some optimists predict that nano-bots the size of a virus and with the computational abilities of today's most powerful computers could be injected into the bloodstream to hunt and kill cancer cells.

In electronics, smaller traditionally means cheaper--think $20 laptop computers within a generation. Such pricing forces companies to rethink old notions about who and what technology is designed for. Consider GrameenPhone of Bangladesh, which has sold 20,000 cellular phones and solar rechargers to desperately poor "phone ladies." They are earning, on average, twice the nation's per capita income by selling air time to friends and neighbors in their villages, and linking local farmers to markets offering the best price for their harvest. What if a cell phone could be produced so cheaply that every one of those farmers could afford one?

Giant new technology markets would develop, assuming Silicon Valley was open to what A. Richard Newton, dean of UC Berkeley's College of Engineering, calls "radical, disruptive business models" that will define the future. To win that future, companies will have to buck quarter-to-quarter capitalism and risk failure on far-out plans. Fortunately, some in the valley already are doing just that.

The long-promised emergence of biotech as a dominant force in the economy has never quite materialized. Silicon Valley may change that with a marriage of bio- and electronic technologies.

The region boasts 750 life sciences firms--plus Stanford University, UC Berkeley and UC San Francisco--to form the largest concentration of biotech talent on the planet. About 150 companies are using "bioinformatics" to create pharmaceutical products, or to find cures for cancer or AIDS, according to economist Henton, president of Collaborative Economics in Mountain View. "The next big thing will come out of convergences," he predicts.

Examples abound. Supercomputers made Applera Corp. in Foster City a prime mover in decoding the human genome in 2001--considered one of the great accomplishments in bioscience history. Also, one of the most compelling new tools is the microarray, pioneered by Santa Clara-based Affymetrix Inc. The company builds "gene chips"--dime-sized pieces of silicon onto which are placed half a million unique strands of DNA. In one of many applications for gene chips, cancer researchers pour tumor-cell RNA--genetic material that binds selectively to DNA--over the gene chip, then use a specialized electronic scanner and computer supplied by Affymetrix to analyze the resulting information. The method has helped identify hereditary links to leukemia, and it recently revealed a genetic marker for whether a breast tumor is treatable with surgery--or will become a metastasizing killer.

Such technologies are expected to lead to personalized medicine, such as drug regimens customized for a person's genetic profile. Since the decoding of the human genome, the market for such products has exploded. Last year Affymetrix sold 280,000 gene chips to researchers and pharmaceutical companies.

If things go well, a local planning organization called Joint Venture: Silicon Valley Network projects that, by 2005, the region could generate the lion's share of revenues in a $10-billion to $15-billion bio-high-tech market.

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