(This essay is adapted from the following video)
For decades, Silicon Valley has been the epicenter of the tech industry, but that could be changing. Increasingly, cities and regions around the world are emerging as new innovation hubs, challenging Silicon Valley's dominance.
From Sweden's Sustainability Valley to the City of Hefei in central China, from the advanced manufacturing cluster in Ireland to Silicon Valley's renewed interest in developing smaller and more specific types of nuclear reactors, this article shares some of the specific locations of emerging tech hubs and explores the driving forces behind them.
The Nordic Arctic Hub
In Sweden, a new Silicon Valley called the Sustainability Valley is taking shape in the Arctic Circle area. This hub hosts numerous startups driving advancements in clean energy and mobility solutions.
One notable aerospace startup, Heart, enjoys support from elites such as Bill Gates. Heart is developing a 30-seat battery-powered electric plane that has already garnered orders from United Airlines and Air Canada.
Another noteworthy company, Einrida, backed by Soros, specializes in electric trucks and was recently approved for driverless delivery tests in the U.S.
Additionally, Northvolt, a prominent player in the Sustainability Valley, aims to surpass well-established battery suppliers like CATL, Panasonic, and LG by 2026. Northvolt plans to employ 4,000 people and power 1 million cars annually. Notable investors in the Sustainability Valley include IKEA, Daniel Eck (founder of Spotify), and Sweden's Wallenberg family.
The Nordic Arctic Hub extends beyond Sweden, with Norway's Freyr Battery, Iceland's Carbfix, and Denmark's Everfuel also contributing to the success in the area. According to McKinsey, these companies have the potential to create 1 million jobs in the region by 2050.
City of Hefei, China
You may never have heard of the City of Hefei, but this Chinese city has been home to some of the most iconic Chinese tech giants and startups. Nio, ChangXin Memory Technologies(长鑫存储), Boe Technology(京东方) and iFly Tech (科大讯飞) have all found their homes in Hefei.
Situated amidst larger business hubs like Shanghai, Hangzhou, and Wuhan, Hefei is often compared to California's Central Valley in the 2000s. As the home appliances market became saturated, leading brands such as Haier, Gili, Medi, TCL, and Chang Hong sought more cost-effective assembly locations. Hefei became their new home.
Boe Technology, one of the world's largest LCD panel producers, soon followed suit, transforming Hefei into a thriving hub of IC components. This paved the way for the emergence of advanced semiconductor companies like Hefei ChangXin and Cambrians, one of China's earliest AI chip developers.
Hefei capitalized on this cluster effect and quickly demonstrated its commitment to the electric vehicle industry. It reportedly invested over 1 billion USD in NIO Automobile during a critical phase when NIO was on the brink of bankruptcy. Today, NIO is a publicly traded company on the New York Stock Exchange, and Hefei has gained recognition as a burgeoning EV hub.
What's the secret ingredient of Hefe's success? It will be disclosed later.
Ireland
Continuing the journey, let's take a closer look at the advanced manufacturing cluster in the heart of Ireland, where small and medium enterprises are taking advantage of smart tech for manufacturing.
The Advanced Technologies in Manufacturing (short for ATM) cluster is based at Athlone Institute of Technology and works to help small businesses take advantage of new technologies such as machine learning and automation to become more productive and competitive.
The ATM cluster organizes innovation circles, digital maturity assessments, and business-to-business matchmaking. It also works with regional industry players and strategic partners to create opportunities and foster growth in the region.
Silicon Valley
The following hubs to be explored are established innovation centers in the process of forming new cluster effects. One noteworthy development is Silicon Valley's renewed interest in nuclear technology.
According to CNBC, unprecedented venture capital has been poured into nuclear energy, leading to smaller and more specific types of nuclear reactors. This trend is driven by private investors seeking to address climate change and overcome technical and regulatory risks associated with nuclear energy.
Startups in the nuclear industry are exploring different generators, fuels, and functions to achieve cost competitiveness. Some companies are simplifying the complex process of building new nuclear plants to make it more affordable. While critics highlight historical concerns regarding the high cost and slow progress of the industry, Silicon Valley, known for its persistence, may emerge as a new powerhouse in the nuclear sector.
City of Mianyang, China
City of Mianyang, a once sleepy town in China's Sichuan Province, is a remarkable atomic-tech hub. During the 1960s, Chairman Mao initiated the Third Front Construction, relocating China's institutions, research facilities, and military factories to safer inland areas amid China's falling out with the Soviet Union. Mianyang emerged as a thriving center for defense research and development, playing a crucial role in China's acquisition of atomic weapons and space satellites, as reported by the South China Morning Post.
While Mianyang may have appeared quiet and irrelevant after China's transformation into a market-driven economy and the decline of Changhong, a leading TV set maker, the city's strategic importance surged due to Beijing's shift towards self-reliance amid a prolonged trade and tech war with the United States.
The new strategy aims to reduce China's dependence on foreign countries for critical technologies. In 2020, Liu He, China's former Vice Premier and Chairman Xi's top economic advisor, visited Mianyang and stressed the importance of aligning the city's activities with national defense and integrating military and civilian technologies.
As China's central government focuses on promoting regional development in advanced technology, it remains cautious about resource allocation and funding scandals. In this regard, Mianyang has built an impressive track record. There are rumors that China is intensifying its efforts to strengthen the indigenous BeiDou global navigation system as an alternative to the U.S.-controlled global positioning system (GPS). Experts believe that Mianyang is well-positioned to tackle the challenges associated with this ambitious endeavor.
Tainan, Taiwan
The escalating U.S.-China technology rivalry has brought worldwide fame to Taiwan's Semiconductor Manufacturing Corporate Operation (TSMC), the world's leading chip maker. Initially, there were rumors about TSMC relocating its most advanced 3NMR D-base and factory to the U.S., leading to discussions about the "detaiwanization" of the company. However, in late 2022, TSMC made headlines with the grand opening of its three NM chip production line in Taiwan's Tainan Science Park. This sends a message that Tainan, often referred to as the Silicon Valley of Taiwan, is a highly competitive and enduring hub for advanced semiconductor manufacturing on the global stage.
Regional Adjacent: Singapore + China’s Greater Bay Area
One of the patterns that cannot be overlooked is the remarkable cluster effect generated by regional boundaries, or, as some would aptly term it, regional adjacent clusters? Here are a few examples.
First, the newfound bounding between Singapore and China's Greater Bay Area. It was believed four out of five wealthiest Chinese are living in China's Greater Bay Area, a region in southern China that consists of the cities of Hong Kong, Macau, and nine other cities in the Guangdong Province, and houses an impressive population of 70 million.
Over the years, Singapore has been ahead of the game when it comes to investing in China's regional development, with flagship projects such as the Suzhou Industrial Park established in 1994. This model has been replicated in Tianjin and Chongqing, and now Singapore has set its sights on China's Greater Bay Area.
According to the South China Morning Post, the cooperation between Singapore and the Greater Bay Area will go beyond just manufacturing and assembly lines. Take Canton, the heart of the Greater Bay Area, as an example. Its bilateral trade with Singapore reached a whopping 19 billion dollars yearly. Guangzhou, the capital of Canton province, has an anchor development project with Singapore that seeks to turn Guangzhou into a hub of so-called high-value production.
This anchor investment has opened the door for many Singapore firms to enter the market, from venture capitalists to financial institutions. Singapore and the Greater Bay Area's collaboration is projected to tap into various sectors such as advanced manufacturing, information technology, research and development, and services. A wave of med tech firms had already gained traction before the coronavirus pandemic.
Regional Adjacent: Saudi + India
Another notable bounding is between Saudi and India. With India slated to be the world's third-largest economy by 2030 and a projected 130 percent increase in oil demand in India by 2040, the burgeoning partnership between Saudi Arabia and India is certainly one to watch.
In 2021, Saudi Foreign Minister Prince Faisal bin Farhan held extensive meetings with his Indian counterparts, where Saudi-India trade has been discussed with new plans to create a commercial corridor between the Arabian Peninsula and the Indian subcontinent. Echoing the news, Saudi Arabia is predicted to make India its biggest oil market, and India is already Saudi Arabia's third-largest trade partner.
The plan for India's Arab Mediterranean Corridor is expected to create new manufacturing value chains that will service Middle Eastern markets. According to Periferral Michael Tancham, Saudi Arabia can utilize its maritime route across the Arabian Sea to create a commercial corridor between the Middle East and Asia, unlocking a variety of opportunities in agriculture and industry. Unsurprisingly, the relationship between the two countries is only growing stronger and could soon provide an alternative to other trade corridors in the region.
Academic Adjacent
Besides the unique regional adjacent effect, another critical factor to create innovation clusters can be called academic adjacent. Returning to Hefei, where remarkable feats are accomplished in attracting China's tech giants and lucrative startup unicorns, much credit goes to its association with China's esteemed Science Academy, the University of Science and Technology of China (USTC).
USTC is widely recognized as China's equivalent to Caltech. Notably, the emergence of iFly Tech, a world-leading voice recognition technology company, can be traced back to USTC's dormitories. In the beginning, the founding team faced financial hurdles as their groundbreaking product was ahead of its time. Nevertheless, the Jefe government promptly intervened, injecting significant investments to ensure the company's continued success. USTC maintains its role in nurturing a steady stream of tech entrepreneurs, leaving other Chinese cities envious of Jefe's thriving ecosystem.
Similar to Hefei, the City of Mianyang managed to transform itself from a sleepy town to China's hub for defense research. It is home to the China Academy of Engineering Physics and has attracted top Chinese physicists. Notably, nuclear physicist Dung Jiashian, a key figure in organizing and contributing to China's first nuclear weapon launch, has made significant contributions within this dynamic hub.
Venturing beyond China, another remarkable academic-driven innovation cluster is in the UK, the long-standing life sciences hotbed known as The Golden Triangle, comprising Oxford, Cambridge, and London.
According to The Economist, this region is believed to be the leader in the life sciences industry, shining brightly as a jewel in Britain's economy.
Where the Internet Penetrates
Lastly, as China shifted from being the global manufacturing powerhouse to becoming the largest consumer market, there is a growing belief that India has the potential to wield similar influence, but in the realm of the online world. With its impressive internet penetration, which has exceeded 50 percent in recent years, India is poised for significant growth across various digital domains. Balaji Srinivasan, a renowned tech entrepreneur, investor, and Bitcoin enthusiast, shared his prediction in a tweet, stating,
"Much of the physical world is made in China; much of the digital world will be made by Indians." The question remains: will this prophecy come to fruition?
There, the cluster effect continues.