Silicon Valley Won't Save Detroit, Detroit's Dragging Down Silicon Valley. Or Not.

Recently, firms like Tesla have launched themselves into the public eye by trumpeting the meme that Silicone Valley’s innovation-driven culture will show the way for Detroit which remains mired in old-economy faults. And it’s a storyline that has yielded millions in venture capital and free media attention. The New York Times’ Thomas Friedman unintentionally brought this line of thinking to its point of absurdum by calling on Steve Jobs to “do national service and run a car company for a year.” But as our ongoing Tesla Death Watch consistently demonstrates, Silicon Valley automakers could still stand to learn a thing or two about, you know, actually producing cars from even Detroit’s most dismal. And then there’s this story from The San Jose Mercury detailling the extent to which Silicon Valley is dependent on business from Detroit. “As soon as the automotive industry coughs, a lot of other companies get a cold,” Gartner analyst Thilo Koslowski tells the Merc. “That includes companies in the semiconductor industry and that includes a lot in the Bay Area… It’s a relatively big market for them in Silicon Valley.”

Needless to say, Detroit’s metaphorical cough is getting all kinds of loose and bloody, but high-tech firms aren’t dropping the way traditional auto suppliers have been. In fact sales of auto-related semiconductors are supposed to increase steadily by about $1b per year, hitting $22b in 2009. So what gives? Cars are getting smarter, stupid. Meanwhile, if Silicon Valley can show that it has the attention span for production and customer service-oriented business, it could help America’s auto industry surf the tech-happy industry trends. Declaring game-changer status with a lot of hat and no cattle (as Tesla has) isn’t going to cut it though.