San Jose mayor courts AI companies, innovation edge over SF

Thirty years ago, North San Jose-based Supermicro, Inc., a provider of premium sever and data storage devices, was part of the cavalcade of companies coming to Silicon Valley.

The focus was where’s the best place in the world to build the best server in the world? And it happens to be in San Jose," said Marketing Vice President Michael McNerney.

San Jose Mayor Matt Mahan, Councilman David Cohen, and others, Tuesday at City Hall, touted the city’s past while penning a "welcome" memo for AI companies that are searching for a home.

"How can we leverage basic city services to facilitate and encourage this investment in innovation?," said Mahan. 

He is proposing an AI economic development pilot program, with energy discounts, and tax & fee rebates. The mayor also wants the city to court AI entrepreneurs and start-ups in the Downtown Area through business incubators. And Mahan wants to harness existing AI to improve city services.

"It directs staff to continue to find ways to support local AI companies and organizations," said Stephen Cains, San Jose’s chief innovation officer. Added Dr. Ahmed Banafa, a San Jose State University tech expert, "What took you that long to wait until now?... 60% of the tech boom and the tech revolution is actually fueled by AI companies."

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Banafa said 20 of the world’s top 50 AI companies now call San Francisco home. Their concentration is so dense, its created a nickname: Area AI.

Some experts say a tug-o-war is taking shape between the Capitol of Silicon Valley, and its cosmopolitan neighbor 45-miles to the north.

"Other places may well be joining and doing work. Nowhere matches us, even close," said San Jose Director of Economic Development Nancy Klein.

Leaders in each city hope to become the larger roost for AI innovation, and new AI businesses.

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"This is a place where we want to cultivate the next great technical things," said San Jose 4th Dist. council member David Cohen.

Mayor Mahan will deliver his memo to the city council’s Rules Committee the week of Oct. 16-20. Then, staffers will conceptualize the process, which could take several months before the final resolution is ready to go before the full council.

Jesse Gary is a reporter based in the station's South Bay bureau. Follow him on X (formerly Twitter), @JesseKTVU and on Instagram, @jessegontv