Mao died in 1976, having caused the death of millions of Chinese people. In 1977 communist China removed restrictions on emigration, and emigration of college students and professionals resumed from mainland China, although in the beginning it was just a trickle. In 1978 Deng Xiaoping seized power in Beijing. In December 1978 at the Third Plenum of the 11th Central Committee of the Chinese Communist Party, Deng launched economic reforms that reopened mainland China to the world. In January 1979 formal diplomatic relations with the USA were reestablished after 30 years of hostilities. In 1979 the Chinese benefited from a change in US immigration policy: the USA decided to treat Taiwan like an independent country, and therefore its immigrants did not affect the quota for mainland China. Ditto for Hong Kong that was technically part of Britain. Separate quotas for mainland China, Taiwan and Hong Kong meant a higher total number of Chinese immigrants. In November 1985 China adopted the Emigration and Immigration Law that guaranteed the rights of Chinese citizens to travel outside China.

In 1978 there were only 28 students from mainland China in all US universities. The USA and mainland China agreed on a program of student exchange in July 1978, five months before they reestablished diplomatic relations. Deng Xiaoping had enthusiastically welcomed the proposal: as a young man, he himself had been a student abroad in 1920 in France for five years under the “diligent-work frugal-study” program (留法勤工儉學運動) organized by Chinese anarchists in exile. At the end of the year, the first batch of 50 Chinese students arrived in the USA. Ironically, they were mostly in their 30s (the oldest was 49): during the Cultural Revolution, for ten years students had been sent to work in the farms or had joined the "Red Guards", and China's universities had been shut down.

All over California several new ethnic Chinese communities appeared far away from the traditional urban Chinatowns. Millbrae south of San Francisco, a railway interchange (where the suburban Caltrain line meets the downtown subway BART) for easy commute to both San Francisco and Silicon Valley, and adjacent to San Francisco International Airport, emerged in the 1980s as a major Chinese enclave. In 1960 there were only two Chinese in Millbrae, but in 2010 they were more than six thousand, while the total populations of Millbrae did not change significantly in the 40 years from 1970 to 2010 (about 20,000), a sign that the new Chinese immigrants bought homes from white families. It was mainly populated by newcomers from overseas, not by old Chinese families moving out of San Francisco. The first wave of Chinese to settle in Millbrae were wealthy Mandarin-speaking Taiwanese families in the late 1970s. After the “Sino-British Joint Declaration” of 1984 (promising the handover of Hong Kong to China by 1997) and the Tiananmen Square massacre of 1989, a new wave of Chinese immigrants arrived, mostly speaking Cantonese. Especially the Hong Kong situation triggered a mass migration of affluent or at least skilled Hong Kong residents (not only to San Francisco but also to Britain, Canada and Australia). Chinese businesses followed, not predated. For example, Cantonese restaurants began to move to downtown Millbrae in the 1990s, when the critical mass of Cantonese-speaking immigrants made Millbrae as appealing as San Francisco. The dynamics was clearly different from a century earlier because in the second half of the 20th century the Chinese were now considered the ideal tenants and employees: hard-working, honest, and financially stable. Unlike a century earlier, when only factories and farms looking for low-wage laborers wanted them, now everybody had a preference for the Chinese. There was no more discrimination against the Chinese, the way there was now against other ethnic minorities (e.g. the Hispanics). In fact, realtors and employers competed for Chinese customers and workers. The concentration of Chinese immigrants in suburban enclaves was therefore a case of voluntary residential clustering. Instead of assimilation, Millbrae’s Chinese immigrants chose "self-segregation", i.e. bilingual Chinese-owned businesses that can provide goods and services familiar to Chinese families (from foods and herbal medicine to acupuncture and Chinese television). The sense of belonging and trust in/preference of Chinese-owned businesses was more important to them than speaking English without an accent or watching the Superbowl or celebrating Thanksgiving. Like in Monterey Park, the new Chinese immigrants didn't dream of a condo in Chinatown but of a detached, single-family house with a lawn and a backyard. Either because of the money they carry with them or because of their well-paid jobs, they had the means to afford an upper middle-class world. Millbrae became an upscale Chinatown.

The post-war economic boom of the USA had ended, but a new boom had started in California: Silicon Valley, centered in the old Santa Clara County between Stanford and San Jose. After the invention of the microprocessor in 1971, startups multiplied.

Chinese immigrants and their children had already begun founding several high-tech startups: Compression Labs (CLI) by Wen Chen (1976) to make video conferencing and digital television components; Solectron by Winston Chen (1977) to make printed circuit boards; Data Technology Corporation (DTC) by David Tsang (1979) for floppy-disk and hard-disk drives; Lam Research by David Lam (1980) for equipment for chip manufacturing (or "etching"); Integrated Device Technology by Chun Chiu, Tsu-Wei Lee and Fu Huang (1980) for semiconductor components; Weitek by Edmund Sun, Chi-Shin Wang and Godfrey Fong (1981) for chips for high-end computers; fiber-optic pioneer E-Tek Dynamics of Ming Shih (1983); magnetic-disk manufacturer Komag of Tu Chen (1983); etc. They were typically based at the periphery of Silicon Valley proper.

And then in the 1980s software became another lucrative field of the area. The foreign-born population of Silicon Valley more than doubled. In 1990 Santa Clara County had a higher percentage of foreign-born residents than San Francisco (23%). Almost two-thirds of all foreign-born engineers and scientists were Asians, mostly Chinese (51%) and Indian (23%). San Francisco's Chinatown was increasingly just a tourist attraction: most Chinese immigrants were scattered around the south bay. These were mostly new immigrants, as opposed to descendants of the old immigrants: in 1990, 71% of the Chinese working in Silicon Valley's high-tech industry had arrived after 1970 (many already with a degree) and 41% after 1980. The Chinese engineering workforce in Silicon Valley was dominated by Taiwanese immigrants between 1949 and the late 1970s and still into the 1980s, but in the 1990s the tide started turning towards mainland China. Ditto for students: fewer and fewer Taiwanese went to study to the USA, whereas more and more Chinese did.

In 1979 Lester Lee, David Lee, David Lam and other Chinese entrepreneurs set up in Silicon Valley a branch of the Chinese Institute of Engineers, and in 1980 eight Chinese engineers led by Lester Lee founded the Asian American Manufacturers Association (AAMA), both of which were initially dominated by Taiwanese-born engineers (the National Taiwan University Alumni Association alone had more than one thousand members in the Bay Area). To those who knew the history of the 19th century, these Chinese organizations, aimed at protecting and helping new immigrants, were Silicon Valley's 20th-century version of the "Six Companies" of the 19th century.

Until the mid-1970s most foreign immigrants into California had come from Europe. In 1975 the USA surrendered in and withdrew from Vietnam, leaving all three countries of Indochina (Vietnam, Cambodia and Laos) under communist rule. During that decade and the following one, Asian immigrants escaping communism flooded California. In the 1980s also many Filipinos and South Koreans moved to Los Angeles. From that point on, most immigrants into California came from Asia and Latin America. Thanks to the Immigration and Nationality Act of 1965 and to the opening of China under Deng Xiaoping, the number of immigrants from mainland China almost doubled from 299,000 in 1980 to 536,000 in 1990. By 1994, 40% of the Asian population of the USA was in California. More than 100 languages were spoken in California.

Nationals of Hong Kong began moving to California in large numbers only in the late 1960s. By 1980, there were 85,000 Hong Kong-born immigrants in the USA, 204,000 in 2000 and then increased slowly to 233,000 in 2018. Therefore the majority of Hong Kong-born immigrants arrived before 2000, whereas the majority of mainland Chinese immigrants arrived after 2000 (about 24% between 2000 and 2009 and 34% between 2010 and 2019).

In 1980 the population of the USA was 226 million and the Chinese population had doubled to 812,178. The ethnic Chinese population increased rapidly: 1,645,472 in 1990, then 2,432,585 in 2000, then 3,794,673 in 2010 (when the US population had passed 300 million), and 5,400,000 in 2020 (out of 331 million people).

There was a trace of China's tradition of manufacturing even in the high-tech world of Silicon Valley: the Chinese tended to gravitate around hardware, while the Indians preferred software.

The Taiwanese were now a tiny minority again. In the late 1980s Taiwanese-born engineers began flooding back to Taiwan because of active government recruitment and sheer opportunity created by a booming economy. Many specialized in bridging the high-tech worlds of Silicon Valley and Taiwan.