Silicon Valley enters “winter”

Xinhua News Agency reporter Wu Xiaoling

The development feast of the US high-tech industry that lasted for nearly two decades will come to an abrupt end in 2022. The cold wave of layoffs caused by sluggish corporate performance and plummeting stock prices has spread to this day, and the number of layoffs in major companies has reached tens of thousands. The closure of the Silicon Valley Bank a few days ago has made Silicon Valley, the global science and technology innovation center entering the “winter”, even worse.

Since last year, U.S. technology companies, including Facebook parent company Yuan, Twitter, and Amazon, have laid off employees in response to the poor economic situation and rising costs. This year, the wave of layoffs has intensified. Alphabet, Google’s parent company, announced 12,000 layoffs, Microsoft announced 10,000 layoffs, and Amazon announced 18,000 layoffs. On March 14, Yuan Company launched the second round of layoff plan, laying off another 10,000 people, ranking first in the list of layoffs.

According to statistics from Crunchbase, an enterprise service database company, more than 140,000 employees in the U.S. technology industry will be laid off in 2022. According to data from the United States Layoff Information Network, as of March 15, 489 technology companies have laid off about 139,000 technical jobs this year.

It is no accident that high-tech companies get together to lay off employees. Due to the Fed’s aggressive interest rate hikes, high inflation, heightened recession risks, and weak market demand, it has had a huge impact on the stock prices and performance of technology companies.

The digital advertising market that the Internet industry relies heavily on is no longer smooth sailing. Government departments have strengthened supervision on access to user privacy information, introduced restrictions on advertising tracking functions, and the economic downturn has also caused advertisers to cut spending, all of which have severely impacted Internet companies.

The downward trend in demand for personal electronic products such as personal computers has intensified, hardware manufacturers such as chips and complete machines, and the software industry have been directly hit. The performance of Intel, Microsoft, etc. has been deeply affected, and indirectly affected the growth potential and expectations of other technology companies. deterioration.

Lack of planning and foresight, as well as blind expansion during the epidemic, are also important factors causing corporate difficulties. Yuan CEO Mark Zuckerberg’s “confession” is quite representative. “At the beginning of the COVID-19 pandemic, the world quickly moved online, and there was a huge increase in revenue from the surge in e-commerce. Many predicted that this would be a permanent acceleration. So I decided to significantly increase my investment. Unfortunately, things did not Developed as I expected.”

The mass layoffs signaled the end of Silicon Valley’s “beautiful cycle,” and the Silicon Valley Bank crisis made matters worse.

Silicon Valley Bank plays a pivotal role in the Silicon Valley venture capital ecology, and its sudden collapse will have a profound impact. The closure of Silicon Valley Bank not only shows the consequences of the liquidity crisis in the banking industry and the cash crunch in the high-tech industry caused by the extreme economic policies of the United States, but also will aggravate the market’s worries about the outbreak of a systemic crisis in the financial and venture capital industries.

The Silicon Valley venture capital community is generally worried that the Silicon Valley banking crisis will cause wider shocks, affect the development of a whole generation of start-ups, and shake Silicon Valley’s position as the center of leading future technological innovation.

The high-tech industry is the engine and barometer of the US economy. Silicon Valley companies have experienced several ups and downs in history, but this time misfortunes never come singly. It is no accident that both the banking industry and technology companies were “injured”. The irresponsible policies of the US government cannot be blamed.

The U.S. government uses administrative measures to sanction commercial companies for no reason, trying to block the normal international business cooperation among high-tech companies, which has brought profound and continuous negative impact on Silicon Valley companies. At the same time, the Fed’s aggressive interest rate hike led to a sharp appreciation of the dollar, which not only had serious destructive consequences globally, but also the US financial industry and high-tech companies. The sickle that tried to harvest the world also cut its own lifeline.

Under internal and external difficulties and policy backlash, the US technology industry represented by Silicon Valley has not entered the “winter” in a day, and Silicon Valley technology companies are also aware of the long-term nature of the industry’s difficult times. People in the technology industry generally believe that the trend of its overall development being hindered will continue in 2023, and it will be a long and difficult road to return to a smooth path.

According to Xinhua News Agency, San Francisco, March 17th