Yes. Duh! That's part of it. But not entirely for the reasons that Thiel says.

You still have to make bits with atoms and like the fallacy of "zero cost" during the Dot Com boom, nothing is actually free - the atoms do matter especially if you don't directly control the manufacturing processes and supply chains. And the costs are still there and must be paid for somehow.

Because only the libertarian politics and rational common sense of the old Silicon Valley from its inception until ~2000 is remotely compatible with innovation and creating new technologies.

What tech is the actual basis of what passes for innovation now? Is any of it actually new? No!

* Functional Programming - invented in the 1960s, so 60 years old

* Databases - invented in the 1970s, so 50 years old

* Neural Nets - invented in the 1980s, so 40 years old

* Web - invented in the 1990s, so 30 years old

These are "old but repurposed" technologies. But that's not really innovation - it's turning the crank on what is already known and defined.

So mostly nothing new and nothing game-changing in the pipeline: it takes 20+ years from a truly new idea being proven in academia or R&D labs to make it to market and be economically relevant.

This is why I left Silicon Valley: it's no longer the future of technology because NOTHING that made it the center up until 2000 is still there "from Alpha to Omega". Things that enabled Silicon Valley to become a tech center included:

* Low Cost Land and Living - HELL NO anymore!

* Libertarian Political and Social ideals - again HELL NO anymore!

* Honest discourse rather than disinformation based on rationalism and empiricism - hey that's not woke!

It's informative to know history because history rhymes. What as the "center of electronics" between 1920 and 1960?

It was NYC and the greater tristate area. It was Chicago to Minnesota. Just like Upstate NY, Northern Ohio, Detroit, Milwaukee once were the world centers of anything Mechanical Engineering (now called the Rust Belt), so too the centers of Electrical Engineering were abandoned (the center of electronics in NYC was downtown Manhattan on Wall Street!).

Those were replaced, temporarily (for 50 years) by Silicon Valley. And now Silicon Valley's time is up, over, done.

The most likely US city to take the crown, such as it is, is Phoenix thanks to TSMC and Intel expanding there, and still having the libertarian ideals mostly intact.

I'm banking also on upstate NY/VT. The advantages include little things like water and agriculture to sustain the Maslow pyramid base better (see the drought news about Lake Powell, Lake Mead and Lake Havasu). Plus a renewed boost around GF, IBM, onsemi, et al. in our area as we discover having all our eggs in East Asian is suicidal in all ways.

COVID shows that nationalism based in ethnicity and simple observable differences is alive and well, and in a pinch, NO COUNTRY will stick its neck out for any other on a good day and in the worst case, nationalism is still the basis of rivalry capable of becoming war, either in direct military forms or any other form.

Globalism is a failure (and I say this as a former world-traveling globalist). In fact it was living overseas that showed me how far Silicon Valley had already fallen and that its ways now are not longer the "right/best" ways.