<strong>Silicon</strong> <strong>Valley</strong> Industry Overview
<strong>Silicon</strong> <strong>Valley</strong> Industry Overview Definition of Industries The <strong>Silicon</strong> <strong>Valley</strong> <strong>Leadership</strong> <strong>Group</strong> has historically organized its view of issues, the analytic work that it conducts, and its framing of policy recommendations by industry sectors. Member companies were organized into 12 business sectors in 2006 Economic Competitiveness Survey and CEO Business Climate Summit. Those 12 sectors were collapsed into seven categories. For the purpose of this year’s <strong>Silicon</strong> <strong>Valley</strong> <strong>Projections</strong> study and focus of policy, we are focusing on the same seven industry clusters, distinguishing between the Internet/Communications and the utility sectors. We have distinguished the eight industries into two groups, listed in the table below: • Primary (or Core)—the industry clusters that drive the <strong>Silicon</strong> <strong>Valley</strong> economy. These industries can be thought of as the economic engines of <strong>Silicon</strong> <strong>Valley</strong>, at the center of innovation, competitive advantage, employment, and around which the economy and other economic sectors revolve. These industries are outwardly focused, competing in the global marketplace. These primary industries are the focus of the Value Chain and Lifecycle frameworks that we have developed and competitive analysis that we have conducted. As described later in this section, the value chain of functions for these and secondary industries span all types of operations, including R&D, manufacturing/distribution, and supporting shared services. The table to the right defines the key segments within each industry. • Secondary—For the most part, secondary industries support primary industries—the core companies and their economic activities or the major impacts that emanate from them. Generally locally focused in their products and services, companies within these support industries may be locally-based or the local operations of national or global firms. While General Manufacturing would typically be classified as a primary industry in many local economies, as it is predominantly outwardly focused and also drives secondary industry support services, based on the size and nature of the General Manufacturing sector in <strong>Silicon</strong> <strong>Valley</strong>, it is classified as a secondary industry in this study. The main sectors within General Manufacturing are listed below, the listing a function of employment in the <strong>Silicon</strong> <strong>Valley</strong> region. It should be noted that, a sizable portion of the general manufacturing sector within the <strong>Valley</strong>, supports the <strong>Valley</strong>’s primary industries. Industry Primary Technology (High-Technology) Life Sciences Financial & Professional Services Secondary General Manufacturing Telecommunications Utilities Education Healthcare Definition Software Hardware/Equipment Internet Commerce Medical Device/Diagnostics Biotechnology Venture Capital Investment Banking Engineering Consulting Food Chemicals Transportation Equipment Fabricated Metals Machinery Service providers Service providers Service providers Service providers Defining the Value Chain Any given company is comprised of a chain of highly interrelated, but distinguishable activities—a “value chain” of activities. Depending on the industry and focus of the company, these activities can be broken down by functions or types of operations. These activities are intertwined both linearly by sequential processes (e.g. sourcing/manufacturing/distribution) and/or tie into one another through hierarchies driving or supporting one another (senior management directing functions and business units; shared services supporting the business units). These activities are broadly encapsulated into the following clusters of activities: • <strong>Leadership</strong> and Strategy: senior management, research & development, product development & engineering, product marketing • Manufacturing/Production: core manufacturing, delivery of services (for service companies), product testing, quality assurance, and manufacturing support 4
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