Since September, the Global Financial Crisis impacts Silicon Valley greatly; The world largest IT Industry group has planned to lay off employees to cut down as much cost as possible. Many well known industries like HP, Yahoo, AMD, etc.. , and also include other new born IT companies in Silicon Valley have already started to cutback in personnel.

The reason of why financial crisis did such a huge damage on IT industry is simple. From the virtual economy to real economy, and from Government to individuals, we all are bound with IT technology closely. And the financial companies are the big buyers of IT industries. 20% of IT technology is made for financial industry, and automotive industries are also important customers for them. Many Silicon Valley’s clients are automobile manufacturers in Detroit. And when these industries have financial problem, IT industries also lose the sale.

Some analysts said: The Silicon valley will face a serious financial problem next year, just like economic bubble burst of web industries few years ago. But some other analysts said that the financial crisis just impacted IT indirectly, and didn’t damage industries as seriously as we thought. IT Market will go through a slow growth and will be fully recovered late next year. The situation is not as bad as web economic bubble few years ago.

The financial crisis also impacted the new IT industries, many of new companies lay off staffs and delay their development plan to cut down as much cost as possible enable to survive. This will help to control any over-investment and make the Web industries run on the reasonable path.
However, some experts also worried that this can also stop many innovations because companies become too careful and conservative. Some experts believe that IT industry still has great development potential. For example, many governments are actively upgrading their IT infrastructures which are include internet speed, network security and reliability etc.. And industries should start to develop new web applications to grab the market.

Many industries have great expectation on Obama’s new government. Obama has announced a new economic rebuild plan and that will be the biggest plan from 50 years to build and upgrade whole Country’s IT infrastructures, include the hardware, software and internet broadband.

Silicon Valley still has the ability to recover their business because they have creativities and innovations. With correct decisions and management, Silicon may overcome the current situation and again become the main force of USA’s economic recovery and be the leader of global IT Industries.

Edited By Henry Lu