The emphasis on electronics came about due to the decline in traditional Scottish heavy industries such as shipbuilding and mining. The government development agencies saw electronics manufacturing as being a positive replacement for people made redundant through heavy industry closures and the associated training and reskilling was relatively easy to achieve.
Like the bedrock of Silicon Valley was in semiconductors, Silicon Glen also had a significant influence in semiconductor design and manufacturing starting in 1960 with Hughes Aircraft establishing its first facility outside the US in Glenrothes to manufacture germanium and silicon diodes. In 1966 Elliott Automation established a production facility in Glenrothes followed by a MOS research laboratory in 1967. This was followed in 1969 by the establishment of wafer fabs by General Instrument in Glenrothes, Motorola in East Kilbride and National Semiconductor in Greenock. Other companies who developed semiconductor wafer fabrication or other manufacturing plants included SGS in Falkirk, NEC, Burr-Brown Corporation, IPS (then Seagate) and Kymata (now Gemfire) in Livingston, CST in Glasgow and Micronas in Glenrothes.
There were some other notable successes such as the large Sun Microsystems plant in Linlithgow and the Digital Equipment Corporation semiconductor manufacturing plant in South Queensferry where the pioneering 64-bit Alpha processor was made. Digital also opened an office in Livingston, developing their flagship VAX/VMS operating system.
It was estimated that the manufacturing sector produced approximately 30% of Europe's PCs, 80% of its Workstations, and 65% of its ATMs.
The heavy dependency on electronics manufacturing hit Silicon Glen hard after the collapse of the hi-tech economy in 2000. Viasystems, National Semiconductor, Motorola and Chunghwa all laid off substantial numbers of employees or closed factories completely. The effects of the Viasystems closure are still felt in the Scottish Borders today. Digital sold their Alpha facility to Motorola who eventually closed it down. Motorola also closed their factory in Bathgate and the substantial NEC plant in Livingston was also closed.
However, there are many promising signs as well as a recognition that diversification away from electronics and manufacturing produces a more balanced and stronger economy. There is also more of an interest in encouraging home grown talent.
In order to diversify away from electronics and manufacturing, the development agencies now
see Global Services as being a potential area of growth, but there is also substantial interest in the software development industry, including Rockstar North, developers of the market leading Grand Theft Auto series. There is also a dynamic and fast growing electronics design and development industry, based around links between the very strong universities and indigenous companies like Wolfson, Linn, Nallatech, Axeon and 4i2i, and projects like the Alba Campus. The software sector has also notably attracted Amazon.com to set up a software development centre in Edinburgh, the first such centre outside the US. There remains a significant presence of global players like National Semiconductor, IBM and Freescale.
The move from a primarily manufacturing dominated region to a wealth creation one has been successful as demonstrated in a report from UBS Wealth Management in 2006 showing Scotland with more venture backed companies per capita than any other UK region.
In addition to the indigenous companies, Silicon Glen continues to have quite a significant semiconductor design community of inward investment companies including Atmel, Freescale, National Semiconductor, Semtech, Micrel, Analog Devices, Allegro MicroSystems, Micro Linear, Micronas and ST Microelectronics.
Scotland had 1,000 companies in electronics employing 25,000 people in 2004, this number has been in decline since 2000 when 48,000 people were employed in the industry in Scotland .