Stung by its persistent power crisis and reeling from the dot-com crash, California's economy is now being hit by a catch in American immigration law.
Many technology workers who flooded into the San Francisco Bay Area during the boom era have discovered that their skills are now useless, as visa restrictions prevent them from seeking re-employment.
Throughout the late 1990s, Silicon Valley was the world's biggest magnet for technology talent. Attracted by big salaries, specialist IT workers - particularly from India and east Asia - abandoned their homes and took their families with them.
Under strong demand from the technology industry, the state of California repeatedly raised its visa quotas, with the annual level doubling to 115,000 between 1992 and 1999.
As the dot-com industry thrived, those levels were again raised to accommodate a new wave of workers arriving to service the financial and accounting needs of the thousands of start-up companies.
But in order to process the influx in the quickest time possible, most companies offered their immigrant workers a visa specific to that organisation only. It was a system that assumed that the new economy would keep booming for ever.
It all worked well until March last year, when the new economy bubble burst, and technology and dot-com companies slashed staff numbers.
But the drastic skills shortage did not disappear, and although many large technology companies such as Cisco Systems, Sun Microsystems and Oracle have cut overall staff levels, they continue to replace specialised talent and cannot turn to the highly skilled, but now unemployed, immigrant population.
Because their work visas applied only to a job they no longer have, the laws prevent them from jumping into a new job even if it is offered.
And because all the enterprise-specific visa quotas have already been filled, the only option for a sacked worker is to apply for a US working visa through the normal channels a process that can stretch from months to years.
The result has been that many of California's best talent is being forced to leave the US, even though there are positions crying out to be filled.
"The system is full of bugs," said Murali Devarakonda, a founder of the Immigrant Support Network.
"The economy was not prepared for what has happened."
- INDEPENDENT
Visa troubles hit America's IT workforce
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