A new center for American innovation may be forming far from California, as the Gulf South becomes an unexpected hotspot for growth.

Texas, Louisiana, Mississippi, Alabama, and Florida on the Gulf Coast are well-placed to benefit from a move away from software-focused growth toward technology in energy, manufacturing, logistics, defense, and infrastructure, according to Entrepreneur.

While Silicon Valley has become synonymous with software-based startups, the Gulf South already possesses much of the industrial backbone needed for the next generation of innovation.

Texas produces over 40% of U.S. crude oil, and the Gulf Coast handles about half of the nation’s refining. Louisiana is also a key center for exporting liquefied natural gas to Europe and Asia.

The Gulf South also hosts major aerospace, defense, and advanced manufacturing operations, as well as several of the nation’s key ports.

Houston, South Louisiana, and Corpus Christi are important entry and exit points for U.S. trade. The region’s shipping, pipeline, and trade routes link it to Latin America, West Africa, Europe, the Middle East, and Asia.

These global connections may become even more valuable as emerging markets account for a growing share of global economic growth.

Unlike places like Silicon Valley and New York, the Gulf South provides infrastructure and global connections at much lower costs. This means investors can allocate more capital to large industries without the high prices found in established markets.

The case for a new innovation hub is also tied to bigger changes happening in the tech industry.

After two decades dominated by software, some of the biggest challenges facing businesses and governments now involve energy transition, resilient supply chains, advanced manufacturing and adapting infrastructure to a changing climate.

The region’s strong presence in defense and space further enhances its appeal.

NASA has infrastructure in Houston, New Orleans and Mississippi, while propulsion testing facilities and defense shipbuilding operations stretch across the Gulf Coast.

That combination of energy production, manufacturing capacity, transportation networks and national security infrastructure could make the region increasingly attractive to investors looking beyond conventional technology markets.

Silicon Valley probably won’t lose its tech leadership overnight, but the next wave of innovation may need much more than just software.

The Gulf South already has much of the infrastructure needed to support these new industries.