Based on Wikipedia:
Silicon Valley is generally used as a metonym for the American high-technology economic sector. Here are the main milestones that formed SV, the world’s leading high-tech startup zone:
During the 1940s and 1950s, Frederick Terman, as Stanford’s provost and dean of engineering, encouraged faculty and graduates to start their own companies. Hewlett Packard and Varian originated from this support.
During 1955–85, solid state technology research and development at Stanford University followed three waves of industrial innovation made possible by support from private corporations, mainly Bell Telephone Laboratories, Shockley Semiconductor, Fairchild Semiconductor, and Xerox PARC.
From the early 1980s onward, many national (and later international) law firms opened offices in SV to provide startups with legal services. Californian law has a number of quirks which startups the chance to compete against established firms, such as a near absolute ban on non-compete clauses in employment agreements.