This year was a powerful reminder that there’s more to the U.S. tech sector than the traditional tech hubs like Silicon Valley or Seattle. In 2022, as established regions and big-name firms stumbled, smaller cities and smaller firms in the American tech sector continued to rise.

As this rollercoaster year comes to a close, the team at One America Works cannot wait to see what 2023 has in store for the communities of the Silicon Heartland. And while nobody has a crystal ball, here are three of the biggest trends we’ll be watching in the New Year:

1. Meeting talent where they are (figuratively and literally)  

The global pandemic forced tech firms of all sizes to reevaluate where, when and how their employees work. Watch for that process to continue in the coming year.

“To win the battle for talent in the long-term and prepare for further changes to come, organizations should be prepared to eschew IT orthodoxies and prize flexibility as the best ability,” the experts at Deloitte concluded in their Tech Trends 2023 report.

“To attract talent, organizations are often relying on a single approach, such as increasing compensation, providing flexible work arrangements, and reskilling or upskilling. However, as the talent shortage continues, choosing just one of these solutions is unsustainable.”

Simply put, it’s likely that 2023 will see more innovation and creativity in tech sector recruiting and retention. And a critical consideration in that process will be how to answer the “where” question, through remote work arrangements, more geographically diverse work sites, or a combination of both.

2. Rebuilding the U.S. manufacturing base

This year, the continued aftershocks of the global pandemic and new sources of geopolitical instability showed the fundamental weakness of many U.S. supply chains. For the tech sector, this triggered a series of investments in domestic manufacturing in semiconductors and clean energy technologies.

In 2023, watch for that wave to build across the American heartland, through new announcements and the expansion of existing investments. Taiwan-based semiconductor manufacturer TSMC already provided an example of what that will look like – in late 2022, the firm announced its original manufacturing investment in Arizona of $12 billion will be expanding to $40 billion

On the clean energy front, look for new investments and expansions in electric-vehicle and renewable energy supply chains, similar to those already announced by firms like Hyundai, which is building a new battery plant in the Atlanta region, and Enel North America, which is expected reveal the location of a large-scale solar cell manufacturing plant in early 2023.

Also in 2023, the second- and third-order impacts of these investments across local economies will become easier to spot, especially in the construction industry. “We are constantly looking for employees starting from college interns and new hires all the way to long-term experience hires,” an official with Turner Construction told ABC-6 TV in Columbus, Ohio, referring to semiconductor and biopharmaceutical plants being built in the region. “The recruiting process is ongoing. It’s get up every day, hard work. It’s something we at Turner are very focused on and the industry is really focused on.”

3. Testing the VC waters

When tech giants like Intel and TSMC invest tens of billions of dollars into the Silicon Heartland, it can overshadow the smaller – but much more numerous – venture capital investments in early-stage tech firms. These VC investments have been vital to the growth of the tech sector in the middle of the country and will continue to play a critical role.

Before inflation and recession fears sent markets tumbling in 2022, the tech hubs of the Silicon Heartland were improving their access to capital in leaps and bounds. But that progress was put on hold as VC firms worldwide scaled back their investments in response to the uncertain economic outlook.

In 2023, we’ll be watching for signs of recovery in VC investment, and just as importantly, where that investment happens. While negative headlines still tend to dominate, there are already voices from within the VC sector predicting a rebound.

This year’s sharp contraction in VC deal volume may benefit the tech ecosystem by setting more realistic expectations for both investors and founders, Edith Yeung, a partner at San Francisco-based Race Capital told Bloomberg News. “The worst time could be the best time to invest in tech,” she said. “I am bullish on overall early-stage tech startups and technology advancement.”

Simon Lomax

Simon Lomax

Research Fellow

About the author: Simon Lomax is a research fellow with One America Works. Based in the Denver Tech Center, he is a former Bloomberg News reporter who has spent more than two decades working in journalism, public policy and cleantech in the U.S. and Australia.