Hardly transforming. SV has been involved with military contracts since post-war in 1946 due solely to the efforts of Professor Fredrick Terman. Starting first with Stanford, where he taught, he started associating the engineering labs with defense programs. This soon followed by establishing Stanford Research Park and bringing on companies who soon started getting them. The man is a legend and is often referred to as the Father of Silicon Valley.
There were also established companies like Lockheed, Hughes, and Gruman and smaller start-up companies founded in the 50s, 60s, and 70s. I started working for one of these, ESL, in 1978 and worked at several others, ArgoSystems and Applied Signal Technologies, up until I retired in 2023. All were mostly involved in working with the Intel community on SIGINT and ELINT systems with other work building SIGINT into aircraft for the Services. During its heyday, late 60s to the 90s, it was nothing to change to a new company every year if you liked as long as you held a golden ticket, a special access clearance. The executive staffs of these companies were closely tied into the Government up to the White House. In fact, the founder of my first company, Dr. William Perry, served as deputy directory of defense under Carter as well as secretary of defense under Clinton.
All this mostly ended when the Cold War collapsed the Soviets. Lockheed is a shell of what it once was as it moved most of its manufacturing elsewhere, keeping only its missiles in Sunnyvale. A lot of the small companies either closed or were bought by the big boys. TRW bought ESL and was, itself bought by Grumann who then partnered with Northrup, Boeing bought ArgoSystems, and Raytheon bought my last company, Applied Signal Technologies.
So, basically, SV has been deeply invested in defense for 81 years.