A UTC office building at 9779 Towne Centre Drive is seen as the likely site for Apple, Inc. in San Diego.

A UTC office building at 9779 Towne Centre Drive is seen as the likely site for Apple, Inc. in San Diego. Photo by Jamie Scott Lytle.

Google, Amazon, and now, Apple Inc. are lining up to be the latest companies to join San Diego’s growing tech hub. While San Diego has plenty of behind-the-scenes tech talent, between companies Qualcomm, Viasat and Illumina, it has few household names in consumer products.

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Mark Cafferty

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Technology in S.D.

Now, it’s about to get one of the world’s most valuable brands, with Apple Inc. planning to add more than 1,000 employees in the area in the next three years, the company said in December. The new site should heat up the competition for local engineering talent, and in the long term, may attract new tech firms to the area.

Apple’s announcement was part of a larger planned expansion, with the electronics company adding new offices in Culver City, Seattle, Washington, and Austin, Texas, where it is building a 133-acre campus for 5,000 people.

Details were sparse: Apple didn’t reveal a location for the planned offices, or which of its business segments would operate from America’s Finest City. However, the company appears to be poised to capture a slice of San Diego’s engineering talent, local business leaders said.

‘A Place Worth Expanding To’

Mark Cafferty, CEO of the San Diego Regional Economic Development Corp., said Apple was looking at current or upcoming talent hubs when his team helped the company in its latest expansion.

“Any time a big consumer-facing company comes because of the talent, it’s something we should try to articulate,” he said. “Large, established companies are willing to look at our region as a place worth expanding to. It’s an important trait of economic success we’re continuing to promote and foster.”

According to a September 2018 report by Cushman & Wakefield, tech was a key driver of growth in San Diego, accounting for about 8.4 percent of its total employment. The metro had 121,941 tech employees, and venture capital funding increased by $1.2 billion from 2011 to 2018.

Cafferty said Apple picked University City for the new site, where Amazon.com Inc. opened a 500-person office. The triangle between Interstate 5 and the 805 has become its own tech hub, hosting multiple startup incubators and software companies.

Replenishing Talent

Another draw, Cafferty said, is that it’s easier to retain tech talent in San Diego than more recognized tech hubs, such as the Bay Area or Seattle.

“People talk about how hard it is to retain talent in San Francisco or Silicon Valley these days,” he said. “There’s always some of that. But I think that the great thing with San Diego is we’ve always seen that talent replenish over time.”

Of course, with Apple looking to hire over 1,000 employees, it’s likely to pull in engineers from local companies. But Cafferty wasn’t concerned — he said San Diego has plenty of new talent lined up, thanks to its universities. UC San Diego alone graduates more engineers per year than UC Berkeley or Stanford, he said.

“I think there’s an awful lot of talent coming in behind (leadership) these days; more than we think,” Cafferty said. “Some folks will see this as an opportunity for people at bigger names to leave their institution for Apple. I see it as an opportunity to bring in some of those younger workers that are hungry for experience.”

An Entry Into Chips?

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Neal Bloom

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Dan Ives

In particular, Apple is expected to poach talent from Qualcomm, with its large base of semiconductor engineers. The chipmaker continued to shed workers in 2018, since it announced plans to cut about 1,200 local employees in June.

Apple might be an option for some of the displaced workers. Before Apple announced its plans for a San Diego office, the company began posting local job openings for roles related to chip design. The company had 24 openings in San Diego listed on its site as of Dec. 31, the majority of which were in hardware engineering.

“It’s great that Apple recognizes San Diego for its domain expertise in the chip and telecom ecosystem. This will give a home to those leaving or soon-to-be-leaving Qualcomm with the layoffs,” Neal Bloom, Startup San Diego chairman and Portfolium co-founder, wrote in an email. “These roles are quite specialized though and won’t necessarily transfer to our SaaS and software engineering roles, but there are plenty of hardware/embedded engineering needs, so it’s great to have the world’s most valuable company opening up shop and joining the community.”

Apple has designed chips for its Apple Watch and wireless AirPod headphones, but it hasn’t made its own modem chips for iPhones. It used Qualcomm’s modems for all of its smartphones, until the two companies became entangled in an extensive, ongoing legal battle over licensing fees and patents.

In late 2017, Apple announced it would drop the San Diego company’s chips from future versions of its devices. Since then, it’s moved to incorporate Intel’s modems into its phones. Apple and Qualcomm are expected to reach an agreement — whether through settlement or trial — this year.

More Control Over Its Devices

Daniel Ives, managing director of equity research for Wedbush Securities, said Apple might be interested in boosting its chip-making capabilities to have more control over its devices, and have more leverage when working with vendors such as Qualcomm or Intel.

“I think (Apple) is trying to get further into chips. They’re expanding their product in terms of having more control of what’s going on in the device,” Ives said. “As they expand their chip presence in the U.S., there’s a big focus with (CEO Tim) Cook to reinvest in the United States. I think San Diego’s going to be a beneficiary, as well as Austin.”

With advancements into 5G, Ives expects to see more vertical production in smartphones for security and other device features. He said San Diego should “check all of the boxes” as a place for Apple to expand.

“With Qualcomm in San Diego, (it) is a hotbed for engineers and just a fertile breeding ground on the technology side. It’s been a natural extension to build a presence in the San Diego area,” he said. “It’s really talent-based. ... When you look outside of Silicon Valley and Seattle and some of the typical spots, I think San Diego is an area that’s going to be a bigger and bigger spot for some of the technology players.”

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